Income Statement Flashcards
Discountinued operations can consist
An impairment loss
Gain or loss from actual operations
Gain or loss on disposal
Extraordinary items
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.
Examples of non extraordinary items
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
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?
No. No items can be presented under IFRS.
Accounting changes are
Changes in accounting estimates
Changes in accounting principles
Changes in accounting entity
Note error connections are not Acc changes
Events resulting in estimate changes
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
Accounting estimate are accounted for
Prospectively
Prospectively
Implement in the current period and continue in future periods. They do not effect previous reported retained earnings
If the change in estimate affecting future periods (several) then the effect on income should be
Disclosed in the notes to the financial statements
Effect of a change in accounting principle
Adjustment that would be necessary to restate the financial statement of prior periods
Change in accounting principles
Adjusting beginning retained earnings in the saltiest period presented
And restate all prior financial periods that are presented - retrospective.
What exception does GAAP have according to reporting changes in an accounting principles?
LIFO
This change is handle prospectively. The beginning of the year of change is the first LIFO layer.
What changes are considered to be both a change in accounting principle and a change in estimate.
A change in the method of depreciation, amortization, depletion.
How is a change in method of depreciation, amortization, depletion handheld?
Prospectively
Start with the current book value
No adjustment needs to be made to retained earnings
Changes in accounting entity
All previous financial statements have to be restated
Full disclosure has to be made.
IFRS does not include the concept of accounting entity.