Income Statement Flashcards

1
Q

Discountinued operations can consist

A

An impairment loss
Gain or loss from actual operations
Gain or loss on disposal

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2
Q

Extraordinary items

A

Material in nature
Significantly different from the typical bus activities
Not expected to recur in foreseeable future
Not normally considered in evaluating operating results of an enterprise.

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3
Q

Examples of non extraordinary items

A

Receivables
Inventories
Intangibles( including goodwill)
Long term securities (permanent decline)
Losses from major strikes by employees
Long term debt extinguishment( part of management strategy)
Gain or loss foreign currency transactions
Gain or loss from sale or abandonment of property plant equipment used in business

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4
Q

Is it allowed under IFRS to present an item of income or expense as extraordinary on the statement of comprehensive income, the separate income statement, or in the notes to the financial statements?

A

No. No items can be presented under IFRS.

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5
Q

Accounting changes are

A

Changes in accounting estimates
Changes in accounting principles
Changes in accounting entity

Note error connections are not Acc changes

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6
Q

Events resulting in estimate changes

A

Changes in the lives of fixed assets
Adjustments of year end accrual of officers salaries or bonuses
Write downs of obsolete inventory
Material no recurring IRS adjustments
Settlement of litigation
Changes in Acc principles that are inseparable from a change in estimate

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7
Q

Accounting estimate are accounted for

A

Prospectively

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8
Q

Prospectively

A

Implement in the current period and continue in future periods. They do not effect previous reported retained earnings

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9
Q

If the change in estimate affecting future periods (several) then the effect on income should be

A

Disclosed in the notes to the financial statements

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10
Q

Effect of a change in accounting principle

A

Adjustment that would be necessary to restate the financial statement of prior periods

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11
Q

Change in accounting principles

A

Adjusting beginning retained earnings in the saltiest period presented
And restate all prior financial periods that are presented - retrospective.

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12
Q

What exception does GAAP have according to reporting changes in an accounting principles?

A

LIFO

This change is handle prospectively. The beginning of the year of change is the first LIFO layer.

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13
Q

What changes are considered to be both a change in accounting principle and a change in estimate.

A

A change in the method of depreciation, amortization, depletion.

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14
Q

How is a change in method of depreciation, amortization, depletion handheld?

A

Prospectively
Start with the current book value
No adjustment needs to be made to retained earnings

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15
Q

Changes in accounting entity

A

All previous financial statements have to be restated
Full disclosure has to be made.

IFRS does not include the concept of accounting entity.

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16
Q

Error correction

A

Error in recognition measurement presentation disclosure in financial statements
Changes from non GAAP/ IFRS to GAAP/IFRS.
Correct error on a year it was presented or up to a year it was presented always adjust to the opening retained earnings.

17
Q

What does IFRS say about error correction?

A

Correct prospectively up to the earliest date that is practicable.

18
Q

Order of the major components of an income and retained earning statement

A

Income or loss from continuing operations
Income or loss from discontinued operations
Extraordinary items