Section 17 - Reporting the Results of Operations & IFRS F/S Flashcards
What is the current FASB presentation of Results of Operations?
Statement of Earnings and Comprehensive Income (I/S0
What are the four sections included in the Statement of Earnings and Comprehensive Income (I/S)?
1) Income from Continuing Operations
2) Discontinued Operations
3) Extraordinary gains and losses
4) Other Comprehensive Income
What are the two ways Income from Continuing Operations may be prepared?
1) Multiple step income statement
ON-TIDE-N-OC
*Comprehensive Income goes to B/S - an Equity account
2) Single step Revenue -Expenses =Income from continuing operations D E =Net Income
*Net Income goes to Retained Earnings
How do you calculate Operating Income?
Sales -Cost of Good Sold =Gross Margin -Selling, General & Admin Expense =Operating Income
How do you calculate Cost of Goods Sold?
Beginning Inventory \+Purchases =Goods Available for Sale -Ending Inventory =Cost of Goods Sold
When are sales and revenues recognized?
EARNED and REALIZABLE at their gross amount (accrual accounting)
When are expenses or losses recognized?
Economic benefit is used up (as incurred)
What are Selling Expenses under “Operating Income”?
- Salaries
- Commissions
- Advertising
- Freight out
*Freight out may be included in COGS or selling expenses
What are General and Administrative Expenses under “Operating Income”?
- Officers’ salaries
- accounting and legal
- Insurance
*bad debt expense could either be a Selling or a General and Admin expense
What are “Non-Operating Items (N)” on the Income Statement?
Other income and expenses such as:
- interest income or expenses
- dividend income
- gain/loss on sale of PPE or investments
- foreign currency transaction gains/losses
- unrealized gains/losses from trading securities,
- unusual OR infrequent items
What is required in order for an entity or a group of components to be reported as “Discontinued Operations” on the Income Statement?
Strategic shift that will have a significant effect on the entity’s operations and financial results
Are expected gains and losses from operations if FUTURE PERIODS included in Discontinued Operations?
No
Are expected loss on disposal through impairment testing recognized in Discontinued Operations?
Yes
Are income statement required to be retrospectively adjusted?
Yes for comparative purposes.
When are transaction classified as “Extraordinary Gains/Losses (E)” on the Income Statement?
Unusual AND infrequent and material.
Does “Extraordinary Gains/Losses” exist under IFRS?
No, only in GAAP
What is included in the Statement of Comprehensive Income?
Net Income
Other Comprehensive Income (DENT) (Net of tax)
Comprehensive Income
Where is “Earnings Per Share” reported?
Companies with publicly traded stock are required to include EPS information at the bottom of their Income Statement and Comprehensive Income for
1) Income from continuing operations
2) Net income
for both BASIC and DILUTED EPS
What is Form 10-K?
Form 10-K is the Annual Report due to SEC that provides a comprehensive picture of a company’s performance, including audited F/S
When is Form 10-K due to SEC?
Large Accelerated Filer (>$700 million in market value securities - 60 days
Accelerated Filer $700 million > $75 million - 75 days
Non-Accelerated Filer
What is Form 10-Q?
Form 10-Q is quarterly reports REVIEWED as opposed to audited. Must be filed for the first three quarters. Last quarter is included with Form 10-K.
When is Form 10-Q due to SEC?
Large Accelerated Filer (>$700 million in market value securities - 40 days
Accelerated Filer $700 million > $75 million - 40 days
Non-Accelerated Filer
Under IFRS, what are the 5 elements in the basic financial statements?
Elements of Financial position
1) Assets
2) Liabilities
3) Equity
Elements of Performance
4) Income
5) Expenses
Under IFRS, is comparative information required?
Yes, 2 years
