LO 4 Explain how to report various income items. Noncontrolling Interest Noncontrolling Interest Illustration 4-16 Presentation of Noncontrolling Interest The noncontrolling interest amounts are not an expense or dividend, but are allocations of net income (loss) to the noncontrolling interest.
4-31 Noncontrolling interest amounts are allocations of net income (loss) to the noncontrolling interest. Illustration 4-9 Illustration 4-19
4-32 LO 4 Explain how to report various income items. Summary of Various Income Summary of Various Income Illustration 4-17
4-33 A significant business indicator. Measures the dollars earned by each share of common stock. Must be disclosed on the income statement. LO 5 Identify where to report earnings per share information. Net Income - Preferred Dividends Weighted Average of Common Shares Outstanding Earnings per Share Reporting Various Income Items Reporting Various Income Items
4-34 Illustration: Lancer, Inc. reports net income of $350,000. It declares and pays preferred dividends of $50,000 for the year. The weighted-average number of common shares outstanding during the year is 100,000 shares. Lancer computes earnings per share as follows:Earnings per ShareEarnings per Share- $50,000$350,000100,000=$3.00per shareLO 5 Identify where to report earnings per share information.Net Income - Preferred Dividends Weighted Average of Common Shares OutstandingAdvance slide in presentation mode to reveal answers.
4-35 EPS Divide by weighted- average shares outstanding Illustration 4-19 Earnings per Share Earnings per Share LO 5
4-36 Retrospective adjustment. Cumulative effect adjustment to beginning retained earnings. Approach preserves comparability across years. Examples include: ► change from FIFO to average cost. ► change from the percentage-of-completion to the completed-contract method. Other Reporting Issues Other Reporting Issues Accounting Changes and Errors LO 6 Understand the reporting of accounting changes and errors. Changes in Accounting Principle
4-37 Change in Accounting Principle: Gaubert Inc. decided in March 2014 to change from FIFO to weighted-average inventory pricing. Gaubert’s income before taxes, using the new weighted-average method in 2014, is $30,000. Illustration 4-20 Calculation of a Change in Accounting Principle Illustration 4-21 Income Statement Presentation of a Change in Accounting Principle (Based on 30% tax rate) Pretax Income Data Accounting Changes Accounting Changes Advance slide in presentation mode to reveal answers. LO 6
4-38 Accounted for in the period of change or the period of and the future periods if the change affects both. Not handled retrospectively. Not considered errors. Examples include: ► Useful lives and salvage values of depreciable assets. ► Allowance for uncollectible receivables. ► Inventory obsolescence.
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