FAR 17 - REPORTING THE RESULTS OF OPERATIONS & IFRS FINANCIAL STATEMENTS

Question 1

Multiple Step I/S

ON-TIDE-N-OC

Answer 1

Operating Income (Sales - COGS - S,G&A)

Non Operating Income (Interests/Divs/Gain on Sale)

Taxes (Current & Non-current)

= Income from Continuing Operations

Discontinued Operations (Strategic Shift)

Extraordinary Gains/Losses (Unusual AND Infrequent)

= Net Income

OCI (DENT)

= Comprehensive Income

Question 2

COGS

Answer 2

Beginning Inventory

+ Net Purchases ( COG Manufactured)

= COG Available for Sale

• Ending Inventory

= COGS

Question 3

Discontinued Operations

(Strategic Shift)

Answer 3

Strategic Shift when:

• Discontinuing operations in a major geographical region
• Discontinuing a major product line
• Disposing a significant investment under equity method
• Other major parts of an entity

Discontinued Operations may qualify as “held for sale”

******Special Items to Note:

• Expected gains/losses from operations in future periods are not included on FS until they occur.
• Future loss may be accrued, treated like an impairment since it is held for sale.
• Gain/Loss is reported net of taxes.

Question 4

Extraordinary Gains & Losses

(shown NET OF TAX)

Answer 4

If transactions are:

1. Unusual
2. Infrequent
3. Material

Question 5

Annual Report (Form 10-K)

Answer 5

Annual audited financial statements

• Large Accelerated - 60 Days (> 700M)
• Accelerated - 75 Days (75M - 700M)
• Non-Accelerated - 90 Days (<75M)

Question 6

Quarterly Report (Form 10-Q)

Answer 6

Quarterly Interim Review

• Large Accelerated - 40 Days
• Accelerated - 40 Days
• Non-Accelerated - 45 Days

Question 7

Selling Expenses

vs.

General & Admin Expenses

Answer 7

Selling Expenses

• Salaries
• Commissions
• Advertising

G & A Expenses

• Officer Salaries
• Accounting
• Legal Expenses
• Insurance

Question 8

Non-Operating Items

Answer 8

Other Income or Expenses

• Interest income or expense
• Dividend income
• Gain/Loss on sale of PPE or Investments
• Foreign currency transactional gain/losses
• Unrealized gain/loss from Trading Securities

Question 9

Taxes

Current vs. Deferred

Answer 9

Current Income Tax

• Current Tax Liability x Current Tax Rate

Deferred Income Tax

• Temporary Differences x Enacted Tax Rate

Question 10

Bonus Formula

Answer 10

Bonus (x) = % * (Income - x)