Income Statement

Question 1

What is the structure of a multiple step income statement

Answer 1

Revenue
(-) COGS
(=) Gross Profit
(-)Operating expenses
(=) Operating income
(+/-) Gains/losses
(=) Income before income tax
(-) Income tax
(=) Income from continuing operations
(+/-) Discontinued operations
(=) Net income
(+/-) Other comprehensive income
(=) Comprehensive income

Question 2

How should Gains/losses from material transactions that are “infrequent in occurrence” and/or “unusual in nature” be presented in the income statement?

Answer 2

Separately as a component of income from continuing operations.