Income Statement Flashcards
Decision has been made to dispose of a component of a business, what happens
the operating results of the component for the period reported on, and any gain or loss from the disposal, should be reported separately from continuing operations, net of tax. In this question, the component was classified as held for sale and was sold in the same year.
EXAMPLE: Thus, the results of operations, the $300,000 ($500,000-$800,000) loss, are reported as a loss from discontinued operations. The loss on disposal would be reported as part of that loss from discontinued operations also.
How do you treat the transition from cash to ACCRUAL?
The cash basis for financial reporting is not a generally accepted accounting basis of accounting (GAAP), thus a n error.
How is the cumulative effect of a change in accounting principle adjusted?
is shown as an adjustment to beginning retained earnings.
A material transaction that is infrequent in occurrence but not unusual in nature should be presented how?
Under U.S. GAAP, a material transaction that is “infrequent in occurrence” but not “unusual in nature” should be presented separately as a component of “income from continuing operations” when the transaction results in a gain or loss.
effect of change in estimates
Changes in estimates affect only the current and subsequent periods
What is the Standard Setter for Private Companies
Financial Accounting Foundation created by the Private Company Council
What are the enhancing qualitative characteristics
verifiability, timeliness, comparability, and understandability
What Does IDEA stand for
Income statement Breakdown: I: Income from continuing operations D: Income from discontinued operations E: Extraordinary Items A: Accounting Principle Changes
Where are Unusual or infrequent items recorded?
Within the upper part of the income statement and before tax
Name the Accounting Changes
PeEe:
Changes in Principle-The cumulative effect is the change in retained earnings
Estimates- Changes done moving forward
Entity - Restate as if together
Error- Reported net of tax in the statement of Retained Earnings
Define PUFER
Pension adjustments
Unrealized gains and losses on Available for Sale Securities
Foreign currency translation
Effective Portion of Cash Flow hedges
Revaluation Surplus (gains) recognized when intangible assets and fixed assets are revalued
Segment Reporting Existence Test
- 10% of combined revenues to internal and external parties
- 10% of the combined assets of all operating segments
- 10% of the greater of reported profit or loss
Sufficiency test, what is it?
Requires reportable segments total at least 75% of revenue from External Parties
When to file 10-K
60-75-90
When to 10-Q
40-45
