西方财务会计 原版课件04(64页PPT).pptx

Chapter 4-1Chapter 4-2C H A P T E R 4INCOME STATEMENT AND RELATED INFORMATIONIntermediate Accounting13th EditionKieso,Weygandt,and Warfield Chapter 4-31.1.Understand the uses and limitations of an income statement.Understand the uses and limitations of an income statement.2.2.Prepare a single-step income statement.Prepare a single-step income statement.3.3.Prepare a multiple-step income statement.Prepare a multiple-step income statement.4.4.Explain how to report irregular items.Explain how to report irregular items.5.5.Explain intraperiod tax allocation.Explain intraperiod tax allocation.6.6.Identify where to report earnings per share information.Identify where to report earnings per share information.7.7.Prepare a retained earnings statement.Prepare a retained earnings statement.8.8.Explain how to report other comprehensive income.Explain how to report other comprehensive income.Learning ObjectivesChapter 4-4ElementsElementsSingle-stepSingle-stepMultiple-stepMultiple-stepCondensed income Condensed income statementsstatementsIncome StatementIncome StatementFormat of the Income Format of the Income StatementStatementReporting Reporting Irregular ItemsIrregular ItemsSpecial Reporting Special Reporting IssuesIssuesUsefulnessUsefulnessLimitationsLimitationsQuality of EarningsQuality of EarningsDiscontinued operationsDiscontinued operationsExtraordinary itemsExtraordinary itemsUnusual gains and Unusual gains and losseslossesChanges in Changes in accounting principlesaccounting principlesChanges in estimatesChanges in estimatesCorrections of errorsCorrections of errorsIntraperiod tax Intraperiod tax allocationallocationEarnings per shareEarnings per shareRetained earnings Retained earnings statementstatementComprehensive incomeComprehensive incomeIncome Statement and Related InformationChapter 4-5Evaluate past performance.Income StatementLO 1 Understand the uses and limitations of an income statement.LO 1 Understand the uses and limitations of an income statement.Help assess the risk or uncertainty of achieving future cash flows.Predicting future performance.UsefulnessChapter 4-6Companies omit items that cannot be measured reliably.Income StatementLimitationsLO 1 Understand the uses and limitations of an income statement.LO 1 Understand the uses and limitations of an income statement.Income measurement involves judgment.Income is affected by the accounting methods employed.Chapter 4-7Companies have incentives to manage income to meet or beat Wall Street expectations,so thatmarket price of stock increases andvalue of stock options increase.Income StatementLO 1 Understand the uses and limitations of an income statement.LO 1 Understand the uses and limitations of an income statement.Quality of earnings is reduced if earnings management results in information that is less useful for predicting future earnings and cash flows.Quality of EarningsChapter 4-8Format of the Income StatementLO 1 Understand the uses and limitations of an income statement.LO 1 Understand the uses and limitations of an income statement.Revenues Inflows or other enhancements of assets or Inflows or other enhancements of assets or settlements of its liabilities that constitute the entitys ongoing settlements of its liabilities that constitute the entitys ongoing major or central operations.major or central operations.SalesSalesFee revenueFee revenueInterest revenueInterest revenueDividend revenueDividend revenueRent revenueRent revenueExamples of Revenue AccountsElements of the Income StatementChapter 4-9Format of the Income StatementLO 1 Understand the uses and limitations of an income statement.LO 1 Understand the uses and limitations of an income statement.Expenses Outflows or other using-up of assets or incurrences Outflows or other using-up of assets or incurrences of liabilities that constitute the entitys ongoing major or of liabilities that constitute the entitys ongoing major or central operations.central operations.Cost of goods soldCost of goods soldDepreciation expenseDepreciation expenseInterest expenseInterest expenseRent expenseRent expenseSalary expenseSalary expenseExamples of Expense AccountsElements of the Income StatementChapter 4-10Format of the Income StatementLO 1 Understand the uses and limitations of an income statement.LO 1 Understand the uses and limitations of an income statement.Gains Increases in equity(net assets)from peripheral or Increases in equity(net assets)from peripheral or incidental transactions.incidental transactions.Losses-Decreases in equity(net assets)from peripheral-Decreases in equity(net assets)from peripheral or incidental transactions.or incidental transactions.Gains and losses can result from Gains and losses can result fromsale of investments or plant assets,sale of investments or plant assets,settlement of liabilities,settlement of liabilities,write-offs of assets.write-offs of assets.Elements of the Income StatementChapter 4-11Single-Step FormatLO 2 Prepare a single-step income statement.LO 2 Prepare a single-step income statement.The single-step statement The single-step statement consists of just two consists of just two groupings:groupings:RevenuesRevenuesExpensesExpensesNet IncomeNet IncomeSingle-Single-StepStepNo distinction between No distinction between OperatingOperating and and Non-operatingNon-operating categories.categories.Chapter 4-12Single-Step FormatLO 2 Prepare a single-step income statement.LO 2 Prepare a single-step income statement.E4-4:Prepare an income statement from the data below.Solution on notes pageChapter 4-13The single-step income statement emphasizesThe single-step income statement emphasizes a.a.the gross profit figure.the gross profit figure.b.b.total revenues and total expenses.total revenues and total expenses.c.c.extraordinary items more than it is emphasized extraordinary items more than it is emphasized in the multiple-step income statement.in the multiple-step income statement.d.d.the various components of income from the various components of income from continuing operations.continuing operations.ReviewSingle-Step FormatLO 2 Prepare a single-step income statement.LO 2 Prepare a single-step income statement.Chapter 4-14Separates operating transactions from nonoperating transactions.Matches costs and expenses with related revenues.Highlights certain intermediate components of income that analysts use.LO 3 Prepare a multiple-step income statement.LO 3 Prepare a multiple-step income statement.Multiple-Step FormatBackgroundChapter 4-151.Operating section 2.Nonoperating section3.Income tax4.Discontinued operations5.Extraordinary items6.Earnings per shareLO 3 Prepare a multiple-step income statement.LO 3 Prepare a multiple-step income statement.Multiple-Step FormatIncome Statement SectionsChapter 4-16Multiple-Step FormatLO 3 Prepare a multiple-step income statement.LO 3 Prepare a multiple-step income statement.The The presentation presentation divides information divides information into major sections.into major sections.1.Operating Section1.Operating Section 2.Nonoperating Section2.Nonoperating Section 3.Income tax3.Income tax Chapter 4-17Multiple-Step FormatIllustration(E4-4):Prepare an income statement from the data below.Solution on notes pageChapter 4-18ReviewA separation of operating and non operating activities of a A separation of operating and non operating activities of a company exists incompany exists in a.a.both a multiple-step and single-step income both a multiple-step and single-step income statement.statement.b.b.a multiple-step but not a single-step income a multiple-step but not a single-step income statementstatement.c.c.a single-step but not a multiple-step income a single-step but not a multiple-step income statementstatement.d.d.neither a single-step nor a multiple-step income neither a single-step nor a multiple-step income statementstatement.Multiple-Step FormatLO 3 Prepare a multiple-step income statement.LO 3 Prepare a multiple-step income statement.Chapter 4-19Companies are required to report irregular items in Companies are required to report irregular items in the financial statements so users can determine the financial statements so users can determine the long-run earning power of the the long-run earning power of the pany.LO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Reporting Irregular ItemsIllustration 4-5 Illustration 4-5 Number of Irregular Items Reported in a Recent Year by 600 Large CompaniesChapter 4-20Irregular items fall into six categories1.Discontinued operations.2.Extraordinary items.3.Unusual gains and losses.4.Changes in accounting principle.5.Changes in estimates.6.Corrections of errors.Reporting Irregular ItemsLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-21Discontinued Operations occurs when,(a)company eliminates the results of operations and cash flows of a component.(b)there is no significant continuing involvement in that component.Amount reported“net of tax.”Reporting Irregular ItemsLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-22Illustration:KC Corporation had after tax income from continuing operations of$55,000,000 in 2008.During 2008,it disposed of its restaurant division at a pretax loss of$270,000.Prior to disposal,the division operated at a pretax loss of$450,000 in 2008.Assume a tax rate of 30%.Prepare a partial income statement for KC.Reporting Discontinued OperationsIncome from continuing operations$55,000,000Discontinued operations:Loss from operations,net of$135,000 tax315,000Loss on disposal,net of$81,000 tax189,000Net income$54,496,000Total loss on discontinued operations504,000LO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-23Reporting Discontinued OperationsDiscontinued Operations are Discontinued Operations are reported after“Income reported after“Income from continuing operations.”from continuing operations.”Previously labeled as“Net Income”.Moved toLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-24Extraordinary items are nonrecurring material items that differ significantly from a companys typical business activities.Extraordinary Item must be both of an Unusual Nature and Occur InfrequentlyCompany must consider the environment in which it operates.Amount reported“net of tax.”Reporting Irregular ItemsLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-25Are these items Extraordinary?(a)A large portion of a tobacco manufacturers crops are destroyed by a hail storm.Severe damage from hail storms in the locality where the manufacturer grows tobacco is rare.(b)A citrus growers Florida crop is damaged by frost.(c)A company sells a block of common stock of a publicly traded company.The block of shares,which represents less than 10%of the publicly-held company,is the only security investment the company has ever owned.YESYESReporting Extraordinary ItemsNONOYESYESLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-26Are these items Extraordinary?(d)A large diversified company sells a block of shares from its portfolio of securities which it has acquired for investment purposes.This is the first sale from its portfolio of securities.(e)An earthquake destroys one of the oil refineries owned by a large multi-national oil company.Earthquakes are rare in this geographical location.(f)A company experiences a material loss in the repurchase of a large bond issue that has been outstanding for 3 years.The company regularly repurchases bonds of this nature.NONOReporting Extraordinary ItemsYESYESNONOLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-27Illustration:KC Corporation had after tax income from continuing operations of$55,000,000 in 2007.In addition,it suffered an unusual and infrequent pretax loss of$770,000 from a volcano eruption.The corporations tax rate is 30%.Prepare a partial income statement for KC Corporation beginning with income from continuing operations.Income from continuing operations$55,000,000Extraordinary loss,net of$231,000 tax539,000Net income$54,461,000Reporting Extraordinary Items($770,000 x 30%=$231,000 tax)LO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-28Extraordinary Items are Extraordinary Items are reported after“Income from reported after“Income from continuing operations.”continuing operations.”Previously labeled as“Net Income”.Reporting Extraordinary ItemsMoved toLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-29Reporting Irregular ItemsReporting when both Reporting when both Discontinued Operations Discontinued Operations and Extraordinary and Extraordinary Items are present.Items are present.Discontinued OperationsExtraordinary ItemLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-30Irregular transactions such as discontinued operations Irregular transactions such as discontinued operations and extraordinary items should be reported separately and extraordinary items should be reported separately inin a.a.both a single-step and multiple-step income both a single-step and multiple-step income statementstatement.b.b.a single-step income statement onlya single-step income statement only.c.c.a multiple-step income statement onlya multiple-step income statement only.d.d.neither a single-step nor a multiple-step income neither a single-step nor a multiple-step income statementstatement.ReviewReporting Irregular ItemsLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-31Unusual Gains and LossesMaterial items that are unusual or infrequent,but not both,should be reported in a separate section just above“Income from continuing operations before income taxes.”Examples can include:Write-downs of inventoriesForeign exchange transaction gains and lossesThe Board prohibits net-of-tax treatment for these items.Reporting Irregular ItemsLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-32Unusual Gains and LossesReporting Irregular ItemsLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Illustration 4-9Illustration 4-9Income Statement Presentation of Unusual ChargesChapter 4-33Changes in Accounting PrinciplesRetrospective adjustmentCumulative effect adjustment to beginning retained earningsApproach preserves comparabilityExamples include:change from FIFO to average costchange from the percentage-of-completion to the completed-contract methodReporting Irregular ItemsLO 4 Explain how to report irregular items.LO 4 Explain how to report irregular items.Chapter 4-34Reporting Irregular ItemsLO 4 Explain how to report irregular items.LO 4 Explain how to report irregula