4 The Income Statement and Income Recognition ntermediate Accounting Accounting School. Zhongnan
4 The Income Statement and Income Recognition Accounting School ·Zhongnan University of Economics & Law ntermediate Accounting I 中级会计学
1. Concepts of income Capital Maintenance Concept Under this concept corporate income for a period of time is the amount that may be paid to stockholders during that period and still enable the corporation to be as well off at the end of the period as it was at the b gingin
1. Concepts of income Intermediate Accounting 4 The Income Statement and Income Recognition Capital Maintenance Concept Under this concept, corporate income for a period of time is the amount that may be paid to stockholders during that period and still enable the corporation to be as well off at the end of the period as it was at the beginning
Example of Capital Maintenance Assume a corporation has net assets of $50,000 at the beginning and $90,000 at the end of the year, and that no additional investments or withdrawals were made Ending net assets $90,000 Less: Additiona The corporation could pay Ending net asset out $40,000 to stockholders $90,000 Less: Beginning and still be as well off at 50000) Total income for year-end $40,000
Assume a corporation has net assets of $50,000 at the beginning and $90,000 at the end of the year, and that no additional investments or withdrawals were made. Ending net assets $90,000 Less: Additional investment 0 Ending net assets excluding investment $90,000 Less: Beginning net assets (50,000) Total income for the year $40,000 The corporation could pay out $40,000 to stockholders and still be as well off at year-end. Example of Capital Maintenance Intermediate Accounting 4 The Income Statement and Income Recognition
Intermediate Accounting 4 The Income Statement and Income Recognition Transactional Approach Under this concept, a company records its net assets at their historical cost. and it does not record changes in the asset and liabilities unless a transaction. event or circumstance has occurred that provides reliable evidence of a change in value
Transactional Approach Under this concept, a company records its net assets at their historical cost, and it does not record changes in the asset and liabilities unless a transaction, event, or circumstance has occurred that provides reliable evidence of a change in value. Intermediate Accounting 4 The Income Statement and Income Recognition
Intermediate Accounting 4 The Income Statement and Income Recognition 2. Elements of the Income statement > In FASb statement of Concepts no 6, the FASB defined the elements or " building blocks of the income statement Revenues √ Expenses v Gains v Losses
2. Elements of the Income Statement ➢ In FASB Statement of Concepts No. 6, the FASB defined the elements or "building blocks" of the income statement: ✓ Revenues ✓ Expenses ✓ Gains ✓ Losses Intermediate Accounting 4 The Income Statement and Income Recognition