LO 5 Identify where to report earnings per share information 4 52 Common terms

Lo 5 identify where to report earnings per share

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LO 5 Identify where to report earnings per share information.
4-52 Common terms used for income statement Common terms used for income statement analysis: analysis: EBITDA – Earnings before income, taxes, EBITDA – Earnings before income, taxes, depreciation and amortization depreciation and amortization EBIT – Earnings before income taxes EBIT – Earnings before income taxes Operating income Operating income Pre-tax income Pre-tax income
4-53 1. Understand the uses and limitations of an income statement. 2. Describe the content and format of the income statement. 3. Prepare an income statement. 4. Explain how to report various income items. 5. Identify where to report earnings per share information. 6. Understand the reporting of accounting changes and errors. 7. Prepare a retained earnings statement. 8. Explain how to report other comprehensive income . After studying this chapter, you should be able to: Income Statement and Related Information 4 LEARNING OBJECTIVES LEARNING OBJECTIVES
4-54 A change in accounting principle results when an entity adopts a new accounting principle that is different from the one previously used . A company needs to recognize \the change in accounting principle by: - restating prior periods’ financial statements, and - adjusting the beginning retained earnings balance of the earliest year presented. EXAMPLE: Change from LIFO to FIFO Accounting Changes and Errors LO 6 Understand the reporting of accounting changes and errors. Changes in Accounting Principle
4-55 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 page 180 Advance slide in presentation mode to reveal answers. LO 6
4-56 Accounting Changes and Errors LO 6 Understand the reporting of accounting changes and errors. Changes in Accounting Principles
4-57 Change in Accounting Estimates Accounting Changes LO 6 Understand the reporting of accounting changes and errors.
4-58 Change in Estimate: Arcadia HS, purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time. Depreciation has been recorded for 7 years on a straight-line basis. In 2014 (year 8), it is determined that the total estimated life should be 15 years with a salvage value of $5,000 at the end of that time. Questions: What is the journal entry to correct the prior years’ depreciation? Calculate the depreciation expense for 2014. Change in Accounting Estimate LO 6 Understand the reporting of accounting changes and errors.
4-59 Equipment $510,000 Fixed Assets: Accumulated depreciation 350,000 Net book value (NBV) $160,000 Balance Sheet (Dec. 31, 2013) After 7 years Equipment cost $510,000 Salvage value - 10,000 Depreciable base 500,000 Useful life (original) 10 years Annual depreciation $ 50,000 x 7 years = $350,000

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