ECON 3A Chapter Notes - Chapter 13: Income Statement, Pro Forma, Retained Earnings
Document Summary
Sustainable income: net income adjusted for irregular items (revenues, expenses, gains, losses) Most likely level of income to be obtained in the future. Estimate future earnings without noise of irregular items. Irregular items: discontinued operations, extraordinary items. Discontinued operations: disposal of a significant component of a business. Elimination of a major class of customers or an entire activity. Income statement report gain (or loss) from discontinued operations, net of tax. Sold unprofitable division, loss from () Extraordinary items: events and transactions that meet 2 conditions: unusual in nature, abnormal, incidentally related to customary activities. 2. infrequent in occurrence: event / transaction should not be reasonably expected to recur in future. Net of taxes in a separate section of income statement, directly below discontinued operations. For the period ended date discontinued operations: loss from extraordinary item: exproportion of investment, net of changes in accounting principle.
