操作結果報告

Chapter12IncomeandChangesinRetainedEarningsReportingtheResultsofOperationsThistaxexpensedoesnotincludeeffectsofunusual,nonrecurringitems.Theseunusual,nonrecurringitemsareeachreportednetoftaxes.DiscontinuedOperationsIncome/Lossfromoperatingthesegmentpriortodisposal.DiscontinuedOperationsIncome/Lossondisposalofthesegment.Whenmanagemententersintoaformalplantosellordiscontinueasegmentofthebusiness.DiscontinuedOperationsWhenmanagemententersintoaformalplantosellordiscontinueasegmentofthebusiness.Asegmentmustbeaseparatelineofbusinessactivityoranoperationthatservicesadistinctcategoryofcustomers.During2000,ApexCo.soldanunprofitablesegmentofthecompany.Thesegmenthadanetlossfromoperationsduringtheperiodof$150,000anditsassetssoldatalossof$100,000.Apexreportedincomefromcontinuingoperationsof$350,000.Allitemsaretaxedat30%.Howwillthisappearontheincomestatement?DiscontinuedOperations

ExampleDiscontinuedOperationsExampleIncomeStatementPresentation:DiscontinuedOperationsExampleMaterialinamount.Gainsorlossesthatarebothunusualinnatureandnotexpectedtorecurintheforeseeablefuture.Reportednetofrelatedtaxes.ExtraordinaryItemsDuring2000,ApexCo.experiencedalossof$75,000duetoanearthquakeatoneofitsmanufacturingplantsinNashville.Thiswasconsideredanextraordinaryitem.Thecompanyreportedincomebeforeextraordinaryitemof$175,000.Allgainsandlossesaresubjecttoa30%taxrate.Howwouldthisitemappearonthe2000incomestatement?ExtraordinaryItems

ExampleExtraordinaryItems

ExampleIncomeStatementPresentation:ExtraordinaryItems

ExampleAccountingChangesChangeinAccountingPrincipleOccurswhenchangingfromoneGAAPmethodtoanotherGAAPmethod.Makeacatch-upadjustmentknownasthecumulativeeffectofachangeinaccountingprinciple.Thecumulativeeffectisreportednetoftaxesandafterextraordinaryitems.ChangeinAccountingPrincipleExampleAlsoin2000,ApexCo.decidedtochangefromthedouble-decliningbalancetothestraight-linemethodfordepreciation.Theeffectofthischangeisanincreaseinnetincomeof$65,000.Apexreportedincomebeforecumulativeeffectofanaccountingchangeof$122,500duringtheyear.Allitemsofincomearesubjecttoa30%taxrate.Howwouldthisitemappearontheincomestatement?ChangeinAccountingPrincipleExampleComputation:Computation:IncomeStatementPresentation:ChangeinAccountingPrincipleExampleChangeinEstimatesRevisionofapreviousaccountingestimate.Thenewestimateshouldbeusedinthecurrentandfutureperiods.Theprioraccountingresultsshouldnotbedisturbed.ChangeinEstimates

ExampleOnJanuary1,1997,wepurchasedequipmentcosting$30,000,withausefullifeof10yearsandnosalvagevalue.During2000,wedeterminethattheremainingusefulis5years(8-yeartotallife).Weusestraight-linedepreciation.Computethereviseddepreciationexpensefor2000.Recorddepreciationexpenseof$4,200for2000andsubsequentyears.ChangeinEstimates

ExampleLet’smoveontoafewfinaltopics.Price-earningsRatio(P/E)Often,thePrice-EarningsRatioisusedtoevaluatethereasonablenessofacompany抯stockprice.Let’sexaminethisfurther.EarningsPerShare(EPS)Ameasureofthecompany抯profitabilityandearningpowerfortheperiod.Basedonthenumberofsharesissuedandthelengthoftimethatnumberremainedunchanged.EarningsPerShare(EPS)-

PartialIncomeStatementUsetheinformationfromApexCo.thatwasgeneratedearlier.AssumethatApexhasweightedaveragesharesoutstandingof156,250.PrepareapartialincomestatementshowingtheEPSforIncomefromOperationsandfortheotherspecialitems.EarningsPerShare(EPS)-

PartialIncomeStatement*Roundingerror.EarningsPerShare(EPS)Ifpreferredstockispresent,subtractpreferreddividendsfromnetincomepriortocomputingEPS.EPSisrequiredtobereportedintheincomestatement.AccountingforCashDividendsDeclaredbyboardofdirectors.Notlegallyrequired.Createsliabilityatdeclaration.RequiressufficientRetainedEarningsandCash.DividendDatesDateofDeclarationBoardofdirectorsdeclaresthedividend.Recordaliability.DividendDatesEx-DividendDateThedaywhichservesastheownershipcut-offpointforthereceiptofthemostrecentlydeclareddividend.DividendDatesXDateofRecordStockholdersholdingsharesonthisdatewillreceivethedividend.

(Noentry)DateofPaymentRecordthepaymentofthedividendtostockholders.DividendDatesDividendDates

QuestionOnJune1,1999acorporation’sboardofdirectorsdeclaredadividendforthe2,500sharesofits$100parvalue,8%preferredstock.ThedividendwillbepaidonJuly15.WhichofthefollowingwillbeincludedintheJuly15entry?

a.DebitRetainedEarnings$20,000.b.DebitDividendsPayable$20,000.c.CreditDividendsPayable$20,000.d.CreditPreferredStock$20,000.OnJune1,1999acorporation抯boardofdirectorsdeclaredadividendforthe2,500sharesofits$100parvalue,8%preferredstock.ThedividendwillbepaidonJuly15.WhichofthefollowingwillbeincludedintheJuly15entry?

a.DebitRetainedEarnings$20,000.b.DebitDividendsPayable$20,000.c.CreditDividendsPayable$20,000.d.CreditPreferredStock$20,000.DividendDates

Question$100?8%=$8dividendpershare$8?2,500=$20,000totaldividendAccountingforStockDividendsNochangeintotalstockholders?equity.Allstockholdersretainsameperce