ACC 311 ch 4 ppt

Extraordinaryitemsmustmeettwo tests

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Unformatted text preview: r I nc o m e b e f o r e t ax e s I nc o m e t ax e x pe ns e I ncome f rom cont inuing operat ions Discont inued operat ions: 17 ,0 0 0 (2 1,0 0 0 ) (4 ,0 0 0 ) 7 9 ,0 0 0 2 4 ,0 0 0 5 5 ,0 0 0 Loss f rom operat ions, net of t ax Loss on disposal, net of t ax Moved to Chapter 4-17 315 189 T ot al loss on discont inued operat ions N et income 504 $ 5 4 ,4 9 6 Extraordinary Items Extraordinary items are: nonrecurring material items that differ significantly from typical activities. Extraordinary items must meet two tests: they must be unusual and they must be infrequent. The environment in which the business operates is of primary importance. 18 Extraordinary Items: what they are not • Losses from write­down of receivables • Gains and losses from exchange or translation of foreign currency • Gains and losses from the abandonment of used in business property • Effects of strike • Adjustments or accruals on long term contracts. 19 Extraordinary Items: Exceptions Certain events, though not extraordinary, need special treatment. Gains and losses from discontinued operations (discussed earlier) Material gains and losses from extinguishment of debt (reported as extraordinary item until 2002) Gains and Losses from a prohibition under a newly enacted law or regulation are considered extraordinary, by pronouncement. 20 Reporting Extraordinary Items Reporting Extraordinary Items Extraordinary Items are reported after “Income from continuing operations,” net of tax. Previously labeled as “Net Income”. Moved to Chapter 4-21 I ncome St at ement ( in t h o us a nd s ) Sales Co s t o f g o o d s s o ld $ 2 8 5 ,0 0 0 14 9 ,0 0 0 Ot her revenue (expense): I nt e r e s t r e ve nue I nt e r e s t e x pe ns e T o t a l o t he r I nc o m e 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 bef . ext raord. it em 17 ,0 0 0 ( 2 1,0 0 0 ) ( 4 ,0 0 0 ) 7 9 ,0 0 0 2 4 ,0 0 0 Ext raordinary loss, net of t ax 5 5 ,0 0 0 539 N et income $ 5 4 ,4 6 1 Reporting Irregular Items Reporting Irregular Items Reporting when both Discontinued Operations and Extraordinary Items are present. I ncome St at ement ( in t h o us a nd s ) Sales Co s t o f g o o d s s o ld $ 2 8 5 ,0 0 0 14 9 ,0 0 0 I nt e r e s t e x pe ns e T...
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This note was uploaded on 02/01/2014 for the course ACC 311 taught by Professor Professorchandra during the Fall '13 term at SUNY Albany.

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