Multiple-Step Income Statement Income Statement (in thousands) The presentation Sales $285,000 divides information Cost of goods sold 149,000 Gross profit 136,000 into major sections. Operating expenses: Advertising expense 10,000 1.Operating Section Depreciation expense 43,000 Total operating expense 53,000 Income from operations 83,000 2.Nonoperating Other revenue (expense): Section Interest revenue 17,000 Interest expense （(21,000) Total other (4,000) Income before taxes 79000 3.Income tax Income tax expense 24,000 Net income $ 55,000 Earnings per share $ 0.75 Chapter 1-26 LO 3 Prepare a multiple-step income statement
Chapter 1-26 I n c o m e S t a t e m e n t (in t h o u s a n d s ) S ale s $ 2 8 5 , 0 0 0 C o s t o f g o o d s s old 1 4 9 , 0 0 0 G r o s s p r o fit 1 3 6 , 0 0 0 O p e r a t i n g e x p e n s e s : A d v e r tisin g e x p e n s e 1 0 , 0 0 0 D e p r e cia tio n e x p e n s e 4 3 , 0 0 0 T o t al o p e r a tin g e x p e n s e 5 3 , 0 0 0 I n c o m e f r o m o p e r a t i o n s 8 3 , 0 0 0 O t h e r r e v e n u e ( e x p e n s e ) : I n t e r e s t r e v e n u e 1 7 , 0 0 0 I n t e r e s t e x p e n s e ( 2 1 , 0 0 0 ) T o t al o t h e r ( 4 , 0 0 0 ) I n c o m e b e f o r e t a x e s 7 9 , 0 0 0 I n c o m e t a x e x p e n s e 2 4 , 0 0 0 N e t i n c o m e $ 5 5 , 0 0 0 E a r n i n g s p e r s h a r e $ 0.7 5
Reporting Irregular Items Irregular items fall into six categories Discontinued operations. Extraordinary items. Unusual gains and losses. Changes in accounting principle. Changes in estimates. Corrections of errors. Chapter 1-27 LO 4 Explain how to report irregular items
Chapter 1-27 Irregular items fall into six categories Discontinued operations. Extraordinary items. Unusual gains and losses. Changes in accounting principle. Changes in estimates. Corrections of errors
Reporting Irregular Items Discontinued Operations occurs when, (a)company eliminates the results of operations and cash flows of a component. (b)there is no significant continuing involvement in that component. Amount reported "net of tax." Chapter 1-28 LO 4 Explain how to report irregular items
Chapter 1-28 Discontinued Operations occurs when, (a) company eliminates the results of operations and cash flows of a component. (b) there is no significant continuing involvement in that component. Amount reported “net of tax
Reporting Discontinued Operations Income Statement (in thousands) Discontinued Operations Sales $285,000 are reported after Cost of goods sold 149,000 "Income from continuing operations." Other revenue (expense): Interest revenue 17.000 Interest expense (21,000) Total other (4,000) Income before taxes 79.000 Previously labeled as Income tax expense 24,000 55,000 "Net Income". Income from continuing operations Discontinued operations: Loss from operations,net of tax 315 Loss on disposal,net of tax 189 Moved to Total loss on discontinued operations 504 Net income $54,496 Chapter 1-29 LO 4 Explain how to report irregular items
Chapter 1-29 Other revenue (expense): Interest revenue 17,000 Interest expense (21,000) Total other (4,000) Income before taxes 79,000 Income tax expense 24,000 Income from continuing operations 55,000 Discontinued operations: Loss from operations, net of tax 315 Loss on disposal, net of tax 189 Total loss on discontinued operations 504 Net income $ 54,496 Income Statement (in thousands) Sales $ 285,000 Cost of goods sold 149,000 Previously labeled as “Net Income”. Moved to
Reporting Irregular Items Extraordinary items are nonrecurring material items that differ significantly from a company's typical business activities. Extraordinary Item must be both of an ●Unusual Nature and Occur Infrequently Company must consider the environment in which it operates. Amount reported "net of tax." Chapter 1-30 LO 4 Explain how to report irregular items
Chapter 1-30 Extraordinary items are nonrecurring material items that differ significantly from a company ’s typical business activities. Extraordinary Item must be both of an Unusual Nature and Occur Infrequently Company must consider the environment in which it operates. Amount reported “net of tax