slide1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Session 3 Accounting Assumptions and Principles Balance Sheet Wrap-up The Complete Income Statement Separately Reported PowerPoint Presentation
Download Presentation
Session 3 Accounting Assumptions and Principles Balance Sheet Wrap-up The Complete Income Statement Separately Reported

Loading in 2 Seconds...

play fullscreen
1 / 22

Session 3 Accounting Assumptions and Principles Balance Sheet Wrap-up The Complete Income Statement Separately Reported - PowerPoint PPT Presentation


  • 115 Views
  • Uploaded on

Session 3 Accounting Assumptions and Principles Balance Sheet Wrap-up The Complete Income Statement Separately Reported Items. SFAC Schematic-I (updated). SFAC 8: OBJECTIVES OF FINANCIAL REPORTING Useful Cash Flow Prediction Economic Resource Information. (1 X 3).

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Session 3 Accounting Assumptions and Principles Balance Sheet Wrap-up The Complete Income Statement Separately Reported' - vahe


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide1
Session 3

Accounting Assumptions and PrinciplesBalance Sheet Wrap-up

The Complete Income Statement

Separately Reported Items

Intermediate Accounting I - Fall 2011

sfac schematic i updated
SFAC Schematic-I (updated)
  • SFAC 8: OBJECTIVES OF FINANCIAL REPORTING
  • Useful
  • Cash Flow Prediction
  • Economic Resource Information

(1 X 3)

  • SFAC 2: QUALITATIVE CHARACTERISTICS
  • (Understandibility)
  • Primary
    • Relevance
      • Predictive value
      • Confirmatory value
    • Faithful Representation
      • Completeness
      • Neutrality
      • Free from material error
  • Enhancing
    • Comparability (including consistency)
    • Verifiability
    • Timeliness
    • Understandability
  • Constraints
    • Cost Effectiveness
    • Materiality
  • SFAC 5: RECOGNITION & MEASUREMENTSFAC 7: CASH FLOWS & P,V. MEASUREMENT
  • Recognition
    • Definition
    • Measurability
    • Relevance
    • Reliability
  • Measurement
    • Unit
    • Method
  • Underlying Assumptions
    • Economic entity
    • Going concern
    • Periodicity
    • Monetary unit
  • Principles
    • Historical cost
    • Realization
    • Matching
    • Full disclosure

4

+

2

+

(2 X 4)

(2 X 3)

+

2

+

3

Intermediate Accounting I - Fall 2011

additional disclosures
Additional Disclosures
  • Footnotes
    • Accounting Policies
    • Subsequent Events
    • Noteworthy Transactions
  • Management Discussion and Analysis (MD&A)
  • Management’s Responsibilities
  • Auditors’ Report
  • Compensation in the Proxy Statement

Intermediate Accounting I - Fall 2011

the complete income statement
The Complete Income Statement
  • Single or multiple step
  • Major components
    • Income from continuing operations
      • Gross margin
      • Operating income
      • Other income and expense
    • Separately reported items
      • Discontinued operations
      • Extraordinary items
    • Earnings per share
      • Basic
      • Diluted

Intermediate Accounting I - Fall 2011

earnings quality issues
Earnings Quality Issues
  • Income shifting
  • One time gains and losses
  • Operating versus non-operating income
  • Specific topics
    • Restructuring costs—ASC 420-10-20 or FAS 146, when incurred
    • Transitory or routine
    • Investment gains and losses
    • Pro-forma reporting, reconciliation required

Intermediate Accounting I - Fall 2011

comprehensive income
Comprehensive Income
  • Net income
  • Other Comprehensive Income*
    • Unrealized gains & losses on available for sale securities
    • Translation gains and losses
    • Deferred gains & losses from derivatives
    • Post retirement benefit plan adjustments

(*all net of tax)

Intermediate Accounting I - Fall 2011

comprehensive income reporting
Comprehensive Income--Reporting
  • Flexible
    • Extension to the P&L (p.194)
    • Separate statement (p.195)
      • Often in footnotes

Intermediate Accounting I - Fall 2011

balance sheet presentation
Balance Sheet Presentation
  • Accumulated Other Comprehensive Income
    • Note that the “accumulated” net income is included in Retained Earnings (Astro-Med Inc. p. 196)

Intermediate Accounting I - Fall 2011

separately reported items
Separately Reported Items
  • Discontinued Operations
  • Extraordinary Items
  • Mandated Changes in Accounting Principles

Intermediate Accounting I - Fall 2011

reporting format
Reporting Format

Income from continuing operations before income taxes and extraordinary items

Income tax expense

Income from continuing operations before extraordinary items

Discontinued operations, net of tax

Extraordinary items, net of tax

Net Income

Intermediate Accounting I - Fall 2011

intraperiod income tax allocation
Intraperiod Income Tax Allocation
  • Associate tax on a pro-rata basis with continuing operations and separately reported items

Intermediate Accounting I - Fall 2011

discontinued operations
Discontinued Operations
  • What is an operation?
    • Component of an entity
  • Two key requirements
    • Operations and cash flows will be eliminated (generally this means separate internal reporting), and
    • No further significant involvement

Intermediate Accounting I - Fall 2011

reporting discontinued operations
Reporting Discontinued Operations
  • Footnote disclosure, as appropriate
  • Sale before the end of the reporting period
    • Operating income and loss thru the disposal date
    • Gain or loss on disposal (clearly presented)
  • Held for sale (sale after the end of the reporting period)
    • Operating income and loss thru the end of the reporting period
    • Impairment loss (clearly presented)
    • B/S assets valued at lower of BV or FV less cost to sell
    • B/S assets reported separately
    • Additional gain or loss on sale reported when sold

Intermediate Accounting I - Fall 2011

held for sale definition
Held for Sale Definition
  • See ASC 360-10-45-9 or FAS 144
  • Likely to be sold within a year

Intermediate Accounting I - Fall 2011

impairment on held for sale
Impairment on Held for Sale
  • Selling price versus FV less cost to sell
  • Footnote disclosure, as appropriate (p. 185)

Intermediate Accounting I - Fall 2011

extraordinary items
Extraordinary Items
  • Unusual and infrequent
  • Unusual or infrequent
    • Separate item in operating income
  • Footnote disclosure as appropriate

Intermediate Accounting I - Fall 2011

accounting changes
Accounting Changes
  • Change in accounting principle
  • Change in estimate
  • Change in reporting entity
  • Correction of errors (not an accounting change)

Intermediate Accounting I - Fall 2011

change in actg principle
Change in Actg. Principle
  • Footnote disclosure, as necessary
  • Voluntary
    • Retrospective: apply historically
    • Journal entry in current year, impacts R/E
  • Mandated
    • FASB may allow voluntary treatment
    • Cumulative effect as Separately Reported Item

Intermediate Accounting I - Fall 2011

change in estimate
Change in Estimate
  • Prospective
    • Footnote disclosure, if material
    • Includes depreciation with mandated footnote disclosure

Intermediate Accounting I - Fall 2011

change in entity
Change in Entity
  • Not comparative; therefore, restate prior F/S
  • Footnote disclosure, as appropriate

Intermediate Accounting I - Fall 2011

correction of errors
Correction of Errors
  • If not material, just correct
  • If material
    • Prior period adjustment and restatement of prior financial statements
    • Adjust Retained earnings and Statement of R/E

Intermediate Accounting I - Fall 2011

earnings per share
Earnings Per Share
  • Basic
    • Income to common shareholders / weighted average of common shares outstanding
  • Diluted
    • Adjusted income to common shareholders / weighted average of total common share outstanding
  • Disclose for continuing operations, discontinued operations and extraordinary items

Intermediate Accounting I - Fall 2011