day 17 financial performance 2009 spring vs

day 17 financial performance 2009 spring vs -...

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Earnings and Comprehensive  Income: Financial Performance  Measurement and Reporting Dr. James Gong
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Learning Objectives Aggregation and disaggregation in accounting Balance sheet Income statement Aggregate performance measure  Net income and EPS Operating income and non-operating income Above the line and below the line operating income Comprehensive income Next generation financial statements
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Aggregation and Disaggregation Aggregation is the act of grouping several things  together or considering several things as a whole Grouping based on some common characteristics Students into classes for GPA comparisons Is project discovery more effective than traditional teaching method? Companies into industries How many industries do we have? 5? 10? 12? 17? 30? 48? 49?  100?  Disaggregation is the act of partitioning data into  subgroups
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Rules of Classification and  Aggregation/Disaggregation Categories are exhaustive “All other” category Categories are mutually exclusive and  independent Accounts payable only appear in the balance sheet Classification depends on the purpose (e.g.,  relevance) In order to analyze which party will control the congress Measuring attitude differences among people of different  religions? Measuring attitude differences among people of different party  affiliations? 
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Benefits of Disaggregation Relevance: Predictive value Feedback value or accountability Credibility Verifiability
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Cost of Disaggregation Cost of information preparation Why not firms just report one line “this year’s  earnings is $xx million”?
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