Exam 3: Statements of Income and Comprehensive Income

Cost of goods sold and depreciation expense may be shown on the face of the financial statements or may be disclosed in the notes to the financial statements.

On January 1, 2009, a corporation purchased a truck that cost $20,000. It is being depreciated on a straight line basis over 6 years, with a $2,000 residual value. At the end of 2010, it is determined that the useful life should total 14 years and the residual value should be zero. What is the 2011 depreciation expense?

The following data are available for 2001 (in 000's): Retained earnings, January 1,2001 \ 54 Correction of prior years' error (a debit, pre-tax) 15 Net income (atter tax) 25 Cumulative foreign exchange translation loss 10 Dividends declared (cash) 11 The income tax rate is 40 percent The balance of retained earnings at December 31, 2001, was:

If an abandoned asset's recoverable value increases subsequent to abandonment, the asset may be written up to a maximum of the asset's original carrying value.

Maston Inc., decided to dispose of its telephone manufacturing segment on March 1, Year 1 for $200,000 (book value of net assets, $150,000). The disposal date is June 1, Year 2. Income of the segment for the first two months of Year 1 was $33,000; and for the remainder of Year 1, $107,000. Estimated income for Year 2 to the disposal date is $64,000. Ignoring taxes, calculate the income or loss from discontinued operations and any gain or loss from the disposal of discontinued operations on the income statement of Maston Inc., for the year ended December 31, Year 1.

Gross Profit must always be shown on the face of a single-step income statement.

All OCI items must eventually be recycled to the income statement.

A discontinued operation under ASPE need not be a major line of business, geographic area or a business bought with a view to sale.

Correction of prior years' errors and changes in accounting principles are not recorded net of any income tax effects.

Interperiod income tax allocation:

A corporation had 20,000 shares of common stock outstanding from January 1, 2010, through August 1, 2010, on which date 10,000 additional shares were issued. If existed net income after taxes was $110,000, the calculated earnings per share (rounded to the nearest cent) would be:

Other comprehensive income generally includes unrealized gains or losses which bypass the income statement.

Under IFRS, the statement of comprehensive income includes net income and other comprehensive income.

A disposal group may include both current and non-current assets.

Which of the following may form part of a disposal group?

Both unusual and infrequent items must be reported net of income taxes.

Under ASPE, Assets held for sale may be current OR non-current.

If capital assets of a manufacturing company are sold at a gain of $820,000 less related taxes of $250,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose the effect if this sale as:

On January 2, 2004 a repair cost of $2,000 was incorrectly debited to the equipment account. Equipment is being depreciated on a straight-line basis over a 10-year life with salvage value of 10 percent. The correcting entry for the calendar year end company, on January 20, 2007 (the date the error was discovered, after closing entries had been recorded for 2006) would include a:

Under both ASPE and IFRS, a discontinued operation must be a reportable segment.