الاثنين، 11 أبريل 2011

Income Statement Items: Core Concepts






Discontinued Operations
1.  If a component of an entity has been disposed of or is classified as held for sale, its
operating results (including gain or loss on disposal) are reported in discontinued
operations. When a component is classified as held for sale, its operating results are
reported in discontinued operations in the period(s) when they occur.
2.  The results of discontinued operations, minus (plus) income tax (benefit), are reported
separately in a caption before extraordinary items.

Extraordinary Items
1.  Material transactions or events that are unusual in nature and infrequent in occurrence in the
environment in which the entity operates are reported as extraordinary items. They are
displayed separately in the income statement, net of tax, after results of discontinued
operations.
2.  Certain items are not considered extraordinary. But they may be classified as extraordinary
if they directly result from a major casualty, an expropriation, or a prohibition under a
newly enacted law or regulation.

Accounting Changes and Error Corrections
1.  An accounting change is a change in an accounting principle, an accounting estimate, or
the reporting entity. It does not include an error correction.

2Retrospective application is required for all direct effects and the related income tax

effects of a change in principle. Exceptions are made when it is impracticable to determine
the cumulative effect on any prior period or the period-specific effects on all prior periods
presented. Retrospective application requires that carrying amounts at the beginning of the
first period reported be adjusted for the cumulative effect of the new principle on all periods
not reported. All periods reported must be individually adjusted for the period-specific
effects of applying the new principle.
3.  A change in accounting estimate results from new information and a reassessment of
assets and liabilities. The effects of a change in estimate should be accounted for only in
the period of change and the future periods affected.
4.  A change in estimate inseparable from (effected by) a change in principle is accounted
for as a change in estimate. An example is a change in a method of depreciation,
amortization, or depletion of long-lived, nonfinancial assets.

5.A change in reporting entity is retrospectively applied. It results when (a) consolidated or
combined statements are presented in place of statements of individual entities,
(b) consolidated statements include subsidiaries different from those previously included, or
(c) combined statements include entities different from those previously included.
Errors in financial statements include mathematical mistakes, mistakes in applying
accounting principles, and oversight or misuse of facts existing when the statements were
issued. Thus, a change from an accounting principle that is not generally accepted to one
that is generally accepted is the correction of an error. Error corrections are accounted for
as prior-period adjustments.




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 Earnings per Share (EPS)

1.
Basic EPS (BEPS) equals income available to common shareholders divided by the
weighted-average number of shares of common stock outstanding.
Diluted EPS (DEPS) is based on both common stock and dilutive potential common stock
(PCS).


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