FAR #2 Income statement and statement of Comprehensive Income Flashcards
Criteria to be classified as discontinued Operations
Must Satisfy all the below conditions
- Management commits to a plan to sell the entity
- Entity is available for immediate sale in its present condition
- Active program to locate a buyer
- Sale of the entity to be sold is probable within 1 year
- Entity to be sold is being actively marketed for sale
- Actions required to complete the plan indicate that it is unlikely that significant changes to the plan.
Income Statement
-Income Statement or Profit & Loss statement is presented for the period.
- It lists down all items of revenue and expense for the period and tells you the accounting profit or loss made in the current period.
Components of OCI
PUFI ITEMS
-Each component of OCI is presented NET OF TAXES
Components
- P- Pension Adjustments
- U- Unrealized gain or loss on Available for Sale debt securities
- F- Foreign Currency TRANSLATION gain or loss
-I- Effective & ineffective portion of cashflow hedge
Treatment of OCI
Other Comprehensive Income transferred to Accumulated Other Comprehensive Income (AOCI) in the balance sheet
- Upon realization the amount moved to Retained Earnings
Calculation: Discontinued Operations
Gain or loss from Operations
Impairment loss (NRV-CV)
Gain or loss on Disposal
INCOME FROM DISCONTINUED OPERATIONS, GROSS OF TAX
Add/less: Tax effects
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
- Impairment loss will be recorded only for the year where the component has been classified as held for sale but has not been sold.
- Gain or loss on Disposal will be recorded in the year when it has been sold.
- We will never have impairment loss and gain on disposal in the same year EVER.
Statement of Comprehensive Income
Presented as either:
SEPERATE STATEMENT
- Income statement
- Statement of Comprehensive Income
COMBINED STATEMENT
- Income statement & Statement of Comprehensive Income
