Discontinued operations, and unusual gains and losses are both reported net of tax in the income statement. Under this Subtopic, a tax position is first evaluated for recognition based on its technical merits. Tax positions that meet a recognition criterion are then measured to determine an amount to recognize in the financial statements. That measurement incorporates information about potential settlements with taxing authorities.
43. Income taxes are allocated to each of the following except a.
net earnings of a firm for a period of time. The phrase “income from continuing operations” is used only when gains or losses on discontinued operations occur. Extraordinary items, the cumulative effect of a change in accounting principle, and net income. The definition of what constitutes an extraordinary item should be independent of the operating environment.
C) The dual effect of each transaction is recorded with a debit and a credit. D) None of these answer choices are correct. 20.
The Fasb Came To Which Of The Following Conclusions Regarding Interperiod Income Tax Allocation?
16. Dividends declared on common and preferred stock are subtracted from net income in the computation of earnings per share. 17. Prior period adjustments can either be added or subtracted in the Retained Earnings Statement.
Assume a 30% tax retained earnings rate. 44.
C) Classified as current or noncurrent according to how the related assets or liabilities are classified for financial reporting. B) Classified as current if it relates to a net operating loss carryback and as noncurrent if it relates to an operating loss carryforward. D) The tax effects of future taxable amounts depend on the tax rates at which those amounts will be taxed. C) A valuation allowance is needed if taxable income is anticipated to be insufficient to realize the tax benefit. Current GAAP focuses on the balance sheet and the recognition of liabilities and assets.
Relax credit policies for customers. Pay suppliers all amounts owed. Delay purchases from suppliers until after the end of the fiscal year. 28. Which of the following is an example of managing earnings up?
Wright Company Reports The Following Information For The Year Ended December 31, 2016: Pretax Income
Material losses resulting from the write-off of intangibles. Material losses resulting from correction of errors related to prior periods. 1.The income statement is useful in assessing the risk or uncertainty of achieving future cash flows. A separate line item within income from continuing operations. A separate line item between income from continuing operations and income from dis continued operations. EPS disclosure is required for all items reported net of tax on the income statement. Material restructuring costs are reported as an element of income from continuing operations.
41. Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business? The gain or loss on disposal should be reported as an unusual gain or loss.
- investments by owners.
- net earnings of a firm for a period of time.
- D) exchangeability 18.
- In 2020, Benfer Corporation reported net income of $210,000.
- $150,000 less 20% of $150,000, or $120,000 as an extraordinary loss and $350,000 as an unusual gain.
The carryforward election is a choice that must be made in the year of the operating loss and the choice is irrevocable. C) A deferred tax liability is based on enacted tax rates and laws.
Results of operations of a discontinued component should be disclosed immediately before income from continuing operations. Earnings per share from continuing operations, discontinued operations, and net income should be disclosed on the face of the income statement. The gain or loss on disposal should not be segregated but should be reported together with the results of continuing operations. Most elements of the income statement are not presented net of the intraperiod tax allocation. For example, revenues, the cost of goods sold, and administrative expenses are not presented net of income taxes. 54.
unrealized holding gains. 23. Which of the following is false about an income statement? Items that cannot be measured reliably are not reported in the income statement. It is used to measure the solvency of a company. Income measurement involves judgment. Income numbers are affected by the accounting methods employed.
statement of retained earnings. statement of stockholders’ equity. income statement. balance sheet. Allocating income taxes within a particular reporting period is intraperiod tax allocation. tax expense shown in the income statement is equal to the deferred taxes shown on the balance sheet. extraordinary items and discontinued operations more than these are emphasized in the multiple-step income statement.
20 Intraperiod Tax Allocation
Shown as a separate item in operating revenues or expenses if material and supplemented by a footnote if deemed appropriate. Gross profit is an element of the multiple-step income statement, not the single-step income statement. help assess the risk or uncertainty of achieving future cash flows. Results of operations of a discontinued component should be disclosed immediately below income from operations. If there’s a 50% chance or less of the company’s position being sustained on examination, the tax expense can’t reflect the tax benefit. B) If there’s an 80% chance or less of the company’s position being sustained on examination, the tax expense can’t reflect the tax benefit.
During 2020, Esther had a weighted average of 300,000 common shares outstanding. Compute Esther’s 2020 earnings per share. 61. A statement ledger account of stockholders’ equity includes a column for each of the following except a. accumulated other comprehensive income. common stock.
Chapter 4: Income Statement And Related Information Q
Results of operations of a discontinued component should be disclosed immediately below extraordinary items. gain or loss on disposal of a component of the business. S25. The income statement reveals a. resources and equities of a firm at a point in time. resources and equities of a firm for a period of time. net earnings of a firm at a point in time.
What might a manager do during the last quarter of a fiscal year if she wanted to decrease current annual net income? Delay shipments and sales to customers until after the end of the fiscal year.
The error caused the net income to be reported at almost double the proper amount. Correction of the error when discovered in the next year should be treated as a. an increase in depreciation expense for the year in which the error is discovered. a component which of the following is true about intraperiod tax allocation? of income for the year in which the error is discovered, but separately listed on the income statement and fully explained in a note to the financial statements. a change in accounting principle for the year in which the error was made. 45.
Author: Donna Fuscaldo