BUS 320 Lecture Notes - Lecture 2: Gross Profit, Net Income, Financial Statement

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 320
• Professor: Dennis Chung

Document Summary

Risk for not achieving future net cash inflows. => ci = non shareholder transaction causing a change in equity. => separate irregular from regular items with special treatment to prediction, comparability, materiality problem, intraperiod tax allocation => management can move items around (earning management) => accounting standards put some limits and regulations to restrict management flexibility. Unusual gains and losses (writedowns of inventories, gain/loss on sale of equipment, provision for losses) Special treatment under us gaap only (under discontinued operation) Discontinued operations (income/loss on operations of discontinued operations, Gain/loss on disposition/impairment on net asset of discontinued operations - fair value less cost to sell) Have been disposed of or assets held for sale. Distinguish operations, cash flows and financial elements. Separate major line of business or geographical area of operations. Part of single co-ordinated plan to dispose. Or subsidiary acquired exclusively with a view to resale. Aspe used to be different but now same.