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Chapter 4: Q4-1ISTQ (page 198)
Which of the following is not reported in an income statement under IFRS?
(a) Discontinued operations.
(b) Extraordinary items.
(c) Cost of goods sold.
(d) Income tax.
Option b is the correct answer.
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Finley Corporation had income from continuing operations of \(10,600,000 in 2017. During 2017, it disposed of its restaurant division at an after-tax loss of \)189,000. Prior to disposal, the division operated at a loss of $315,000 (net of tax) in 2017 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Finley had 10,000,000 shares of common stock outstanding during 2017. Prepare a partial income statement for Finley beginning with income from continuing operations.
The non-controlling interest section of the income statement is:
(a) required under GAAP but not under IFRS.
(b) required under IFRS but not under GAAP.
(c) required under IFRS and GAAP.
(d) not reported under GAAP or IFRS.
(Income Statement, EPS) Presented below are selected ledger accounts of Tucker Corporation as of December 31, 2017.
Cash $50,000
Administrative expenses 100,000
Selling expenses 80,000
Net sales 540,000
Cost of goods sold 210,000
Cash dividends declared (2017) 20,000
Cash dividends paid (2017) 15,000
Discontinued operations (loss before income taxes) 40,000
Depreciation expense, not recorded in 2016 30,000
Retained earnings, December 31, 2016 90,000
Effective tax rate 30%
Instructions
Distinguish between the modified all-inclusive income statement and the current operating performance income statement. According to present generally accepted accounting principles, which is recommended? Explain.
Identify at least two situations in which important changes in value are not reported in the income statement.
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