Wiley GAAP 2013: Interpretation and Application of Generally Accepted Accounting Principles

CHAPTER 3

STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Limitations of the Income Statement

Recognition and Measurement

Revenues

Expenses

Gains and losses

Other comprehensive income

Format of Statements of Income and Comprehensive Income

Income from Continuing Operations

Results from Discontinued Operations

Computing the gain or loss on disposal

Future periods

Extraordinary Items

Unusual nature

Infrequency of occurrence

Items specifically included or excluded from extraordinary items

Presentation

Accounting Changes

Other Comprehensive Income

Reporting Comprehensive Income in Two Separate but Consecutive Statements of Income and Comprehensive Income

Earnings per Share

Prior Period Adjustments

Statement of Income and Retained Earnings

Pro Forma Earnings

Development Stage Enterprises

Reporting on the Costs of Start-Up Activities

Exit and Disposal (Restructuring) Costs

Employee termination benefits

Contract termination and other costs to exit an activity

Reporting and disclosure

PERSPECTIVE AND ISSUES

The primary focus of financial reporting is to provide information about an entity’s performance that is useful to present and potential investors, creditors, and others when they are making financial decisions. In financial reporting, performance is primarily measured by net income and its components, which are provided in the income statement.

In contrast to the statement of financial position, which provides ...