Unformatted text preview: m continuing operations before tax
(2) Discontinued operations
(3) Extraordinary items Chapter
4-31 Example of Intraperiod Tax Allocation
Example of Intraperiod Tax Allocation
I ncome St at ement ( in t h o us and s )
Co s t o f g o o d s s o ld $ 2 8 5 ,0 0 0 14 9 ,0 0 0 T o t al o t h e r
I nc o m e f r o m c o nt . o pe r . b e f o r e t a x e s
I nc o m e t a x e x pe ns e
I ncome f rom cont inuing operat ions (4 ,0 0 0 ) 7 9 ,0 0 0 2 4 ,0 0 0 5 5 ,0 0 0 Note: losses reduce the total tax
I nt e r e s t e x pe ns e (2 1,0 0 0 ) Discont inued operat ions:
Loss on operat ions, net of $ 135 t ax 315 Loss on disposal, net of $ 61 t ax 189 T ot al loss on discont inued operat ions
I ncome bef ore ext raordinary it em 504 Ext raordinary loss, net of $ 231 t ax
N et income
4-32 5 4 ,4 9 6
$ 5 3 ,9 5 7 Total Tax Allocated
$23,573 Earnings per Share
• Earnings per share is probably the most important business indicator figure.
• It is computed as:
Net Income less Preferred Dividends
Weighted Average of Common Shares Outstanding
• It measures the dollars earned on each share of common stock.
• Earnings per share is required to be disclosed on the income statement for all the major sections.
• Earnings per share is subject to dilution (reduction), if issue of additional shares is possible in the future.
33 Retained Earnings Statement
• Retained earnings are increased by net income and decreased by net loss and dividends for the year.
• Corrections of errors in prior period financial statements and effects of changes in accounting principles are shown as prior period adjustments to the beginning balance in retained earnings.
• Any part of retained earnings, appropriated for a specific purpose, is disclosed as restricted/appropriated earnings in Notes to financial statements. 34 Retained Earnings Statement
Retained Earnings Statement
Statement of Retained Earnings
For the Year Ended December 31, 2007
Balance, January 1, as previously reported
Prior period adjustment - error correction
Balance, January 1, as restated
Balance, December 31 C...
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