Intermediate Accounting 4
Earnings per share
(net income - preferred dividends)/ weighted average number of common shares outstanding
Component held for sale in the following year
1st: income or loss from operation of to e disposed component from the beginning until the end of the reporting period. 2nd: If impairment loss you add it back
Stereo shop sells audio equipment. The sale of stereo equipment would be included on the income statement as
A Revenue
Investing cash flows outflow
Acquisition of property, plant, and equipment, of investments in stocks and bonds AFS and HTM. Making loans to other entities and acquiring other businesses
Items that are unusual/ infrequent that have a material impact on a company's financial statements are reported when
After tax as a line item included in continuing operations
Multi-step income statement
An income statement that classifies items and uses subtotal for gross profit, operating income and income from continuing operations
Impairment lost
Book vale is more than next fair value it will be impaired. Next you net fair value - book value which will result in a negative number.
Operating cash flows outflow
Cash paid to suppliers, cash for operating expenses, interest, income taxes, securities classified as trading
Operating cash flows inflows
Cash received from customers, from interest, from dividends and from sale of securities classified as trading
Taxable income
Comprised of revenue, expenses, gains and losses
Component sold
Count income from operations of disposed component from the beginning of reporting period until disposal date.
What might be included in nonoperating income for a company that manufactures television
Gain from sale of land and interest income
Which items on an income statement are included in calculating income from continuing operations
Gains, expenses and income tax expense
Non operating income
Includes certain gains and losses and revenues and expenses related to peripheral or incidental activities of comany
What may be included in nonoperating income for a company that manufactures television
Interest income and gain from sale of land
Financing cash flow outflow
Paying cash dividends, repurchasing common stock, repaying short term loans, repaying long terms loans, including capital lease obligations
Operating activities
Payment of rent, collection of cash from customers, payment of interest on debt, receipt of interest on a note receivable, payment to suppliers of inventory
Pro forma earnings are management's view of
Permanent earnings
Financing cash flow inflow
Proceeds from issuing common and preferred stock, reissuing treasury stock, issuing short term debt, issuing long term debt.
Intraperiod tax allocation
Process of associating income tax effects with the income statement components that create those effects
Investing activities
Purchase of a bond of another company, sale of land for cash, receipt of interest on a note receivable
Diluted earnings per share
Reflects potential dilution, potential increase in number of common shares. Diluted should be less than or equal to basic earnings per shares.
Statement of cash flows and income statement are linked through
net income
Operating cash flows add to net income Indirect method
Decreases: Accounts receivable, inventories, prepaid expenses, deferred tax assets, Increases: Accounts payable, other accrued payable, income tax payable, deferred tax liability, interest payable, unearned revenue Losses from disposal of PPE , depreciation expenses, amortization expense
Janex company manufactures refrigerators. What would be included in nonoperating income on Janex's income statement
Interest expense
Financing activities
Issuance of common stock for cash, receipt of principal on a note receivable.
Some items reported in operating income
Selling expense, research and development expenses and revenue
Expenses
The cost of providing goods and services to customers
The profit on the sale of a delivery truck would be recorded on the income statement as
A gain
Expenses reported on an income statement can be classified by nature or by function under
IFRS
Operating income
Includes revenues and expenses directly related to principal revenue generating activities of company
Both basic and diluted earnings per share separately reported for
Income or loss from continuing operations Discontinued operations Net income or loss
Single-step income statement
Income statement that does not classify items as operating and nonoperating income
Operating cash flow deduct from net income Indirect method
Increases: Accounts receivable, inventories, prepaid expenses, deferred tax assets, Decreases: accounts payable, accrued payable, deferred tax liability, interest payable, unearned revenue Gains from PPE equity income from equity method less the cash dividends received during the period.
Revenues
Inflows of resources resulting from providing goods or services to customers
Other comprehensive income items include
Net unrealized holdings gains and losses on investments Gains and losses from and amendments to post retirement benefit plans Deferred gains from derivatives Gains from foreign currency translation
Investing cash flow inflows
Proceeds from sales of property, plant and equipment, from sale of investment in stocks and bonds, from the sale or redemption of investments in bonds classified as held to maturity, from collection of loans, selling components of the company
Discounted operations
Reported after income from continuing operations net of tax. The only below the line item. Disposal of components that represents a strategic shift that has or will have a major effect on a company's operations and financial results
If you include other comprehensive income on the income statement
You would change the name of the statement from income statement to statement of comprehensive income
Balance sheet and income statement are linked through
retained earnings