Write downs of inventories u foreign exchange

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Write-downs of inventories u Foreign exchange transaction gains and losses The Board prohibits net-of-tax treatment for these items. Reporting Irregular Items LO 4 Explain how to report irregular items. Unusual Gains and Losses
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Reporting Irregular Items LO 4 Explain how to report irregular items. Illustration 4-9 Income Statement Presentation of Unusual Charges Unusual Gains and Losses
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u Retrospective adjustment. u Cumulative effect adjustment to beginning retained earnings. u Approach preserves comparability. u Examples include: change from FIFO to average cost. change from the percentage-of-completion to the completed-contract method. Reporting Irregular Items LO 4 Explain how to report irregular items. Changes in Accounting Principles
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u Accounted for in the period of change and future periods. u Not handled retrospectively. u Not considered errors or extraordinary items. u Examples include: Useful lives and salvage values of depreciable assets. Allowance for uncollectible receivables. Inventory obsolescence. Reporting Irregular Items LO 4 Explain how to report irregular items. Changes in Estimate
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u Result from: mathematical mistakes. mistakes in application of accounting principles. oversight or misuse of facts. u Corrections treated as prior period adjustments. u Adjustment to the beginning balance of retained earnings. Reporting Irregular Items LO 4 Explain how to report irregular items. Corrections of Errors
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Relates the income tax expense to the specific items that give rise to the amount of the tax expense. Income tax is allocated to the following items: (1) Income from continuing operations before tax. (2) Discontinued operations. (3) Extraordinary items. Special Reporting Issues LO 5 Explain intraperiod tax allocation. Intraperiod Tax Allocation
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Extraordinary Gain: Schindler Co. has income before income tax and extraordinary item of $250,000. It has an extraordinary gain of $100,000 from a condemnation settlement received on one its properties. Assuming a 30 percent income tax rate. Special Reporting Issues LO 5 Explain intraperiod tax allocation. Illustration 4-13 Intraperiod Tax Allocation
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Extraordinary Loss: Schindler Co. has income before income tax and extraordinary item of $250,000. It has an extraordinary loss from a major casualty of $100,000. Assuming a 30 percent income tax rate. Special Reporting Issues LO 5 Explain intraperiod tax allocation. Illustration 4-14 Intraperiod Tax Allocation
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Total other (4,000) Income from cont. oper. before taxes 79,000 Income tax expense 24,000 Income from continuing operations 55,000 Discontinued operations: Loss on operations, net of $135 tax 315 Loss on disposal, net of $61 tax 189 Total loss on discontinued operations 504 Income before extraordinary item 54,496 Extraordinary loss, net of $231 tax 539 Net income 53,957 $ Calculation of Total Tax Example of Intraperiod Tax Allocation $24,000 (135) (61) (231) $23,573 LO 5 Explain intraperiod tax allocation.
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