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COMM 321 (2)

Income Statement notes.docx

2 Pages

Course Code
COMM 321
Peter Blake

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Income Statement PE GAAP – Income Statement IFRS – Statement of Comprehensive Income Objective: Evaluating past financial performance (net income) & be able to predict future financial performance / cash flows  Must separate continuing operations from discontinued operations Within continuing operations (recurring) - Operating section: Sales – COGS (Gross profit) – SG&A Expenses = Operating Income - Non-operating section: Other Incomes & Gains (Interest/Dividend Revenue, Gain on sale); Other Expenses & Losses (Interest expense, Inventory Write-off, Loss on sale) - Income Tax Expense (on income from continuing operations only) Within discontinued operations - Income(loss) from operations for period owned (net of tax) - Gain(loss) on disposal (net of tax) - Disc. Ops includes those disposed of & held for sale If held for sale, following criteria must be met: - Authorized plan to sell - Available for immediate sale - Asset is reasonably priced - Changes to plan unlikely - Active program to find a buyer Accounting Treatment: - Income (loss) for the period in “discontinued operations” net of tax - No further depreciation on any asset - Asset is written down to lower of carrying value or fair value - On B/S  IFRS: Current Assets PE GAAP: retains original classification
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