Intermediate Accounting, 15th Edition

CHAPTER 4 Income Statement and Related Information

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Understand the uses and limitations of an income statement.
2. Describe the content and format of the income statement.
3. Prepare an income statement.
4. Explain how to report various income items.
5. Identify where to report earnings per share information.
6. Understand the reporting of accounting changes and errors.
7. Prepare a retained earnings statement.
8. Explain how to report other comprehensive income.

Financial Statements Are Changing

The 2011 annual report of Groupon presents the following additional information in its financial statements regarding a calculation of its consolidated segment operating (loss) income (CSOI).

Management of Groupon explained that CSOI is the consolidated operating (loss) income, after adjustment for acquisition-related costs and stock-based compensation expense. They explained, “We consider CSOI to be an important measure for management to evaluate the performance of our business as it excludes certain non-cash expenses. We believe it is important to view CSOI as a complement to our entire consolidated statements of operations. When evaluating our performance, you should consider CSOI as a complement to other financial performance measures, including various cash flow metrics, net loss and our other U.S. GAAP results.”

Why do companies ...