ACCT 103 Lecture Notes - Lecture 31: Equity Method, Net Income, Income Statement

• School: American River College
• Department: Accounting
• Course: ACCT 103
• Professor: Pollard

Document Summary

Current operating performance approach- analysts argue that the most useful income measure reflects only regular and recurring revenue and expense elements. Some unusual or infrequent items don"t reflect a company"s future earning power. Modified all-inclusive concept- companies record most items, including unusual or infrequent ones as part of net income. Four categories for various incomes: unusual and infrequent gains and losses, discontinued operations, non-controlling interest, and earnings per share. Losses on write down of receivables and inventories; gains and losses on extinguishment of debt obligations, gains/losses from sale or abandonment of. Pp&e: they"re part of the non-operating section; fasb has eliminated extraordinary items. We will deduct tax on past or future income statements. Non-controlling interest: when a company owns substantial interest in another company > 50%. Gaap requires that financial statements of both companies are consolidated: if its <20%, report it at fair value in long term investment section, if its 20-50%, you have significant influence.