中级财务会计英文ch03.ppt

,FinancialStatements,Chapter3,IntermediateAccounting12thEditionKieso,Weygandt,andWarfield,PreparedbyCobyHarmon,UniversityofCalifornia,SantaBarbara,1.Understandthepurposesofthebalancesheet.2.Definetheelementsofabalancesheet.3.Explainhowtomeasuretheelementsofabalancesheet.4.Classifytheassetsofabalancesheet.5.Classifytheliabilitiesofabalancesheet.6.Reportthestockholdersequityofabalancesheet.7.Understandtheconceptsofincome.8.Explaintheconceptualguidelinesforreportingincome.,LearningObjectives,9.Definetheelementsofanincomestatement.10.Describethemajorcomponentsofanincomestatement.11.Computeincomefromcontinuingoperations.12.Computeresultsfromdiscontinuedoperations.13.Identifyextraordinaryitems.14.Prepareastatementofretainedearnings.15.Reportcomprehensiveincome.,LearningObjectives,Resources(Assets),BalanceSheet,A=L+OE,BasicAccountingIdentity,BalanceSheet,AssetsProbablefutureeconomicbenefitsobtainedorcontrolledbyaparticularentityasaresultofpasttransactionsorevents.,BasicDefinitions-SFACNo.6,BalanceSheet,BasicDefinitions-SFACNo.6,LiabilitiesProbablefuturesacrificesofeconomicbenefitsarisingfrompresentobligationsofaparticularentitytotransferassetsorprovideservicestootherentitiesasaresultofpasttransactionsorevents.,BalanceSheet,OwnersEquityTheresidualinterestintheassetsofanentitythatremainsafteritsliabilitiesarededucted.,BasicDefinitions-SFACNo.6,BalanceSheet,AssetClassifications,CurrentAssets,BalanceSheetFormat,AssetClassifications,BalanceSheetFormat,LiabilityClassifications,AccountsPayable,Short-termNotesPayable,Collectionsinadvanceofunearnedrevenue,AccruedExpenses,BalanceSheetFormat,CurrentassetsLess:CurrentliabilitiesEquals:WorkingCapitalCurrentassetsCurrentliabilities,=WorkingCapitalRatio,WorkingCapital,LiabilityClassifications,BalanceSheetFormat,EquityClassifications,OwnersEquity,BalanceSheetFormat,Acorporationmustdisclosethechangesinitsstockholdersequityaccountwhenissuingfinancialstatements.,Thisstatementshouldshowinvestmentsbyanddistributionstoownersduringtheperiod,amongotheritems.,StatementofChangesinStockholdersEquity,FASBStatementofConceptsNo.6definedinvestmentsbyownersanddistributionstoowners,asfollows:,Investmentsbyownersareincreasesintheequityofacompanyresultingfromtransfersofsomethingvaluabletothecompanyfromotherentitiesinordertoobtainorincreaseownershipinterests.Distributionstoownersaredecreasesintheequityofacompanycausedbytransferringassets,renderingservices,orincurringliabilitiestoowners.,StatementofChangesinStockholdersEquity,Balance,Jan.1,2007$65,000$143,400$64,900$10,000$283,300Unrealizedincreaseinvalueofavailable-for-salesecurities2,0002,000Netincome62,50062,500Cashdividendspaid(11,200)(11,200)Commonstockissued6,50030,50037,000Balance,Dec.31,2007$71,500$173,900$116,200$12,000$373,600,SCHEDULEACARONMANUFACTURINGCOMPANY,AccumulatedCommonAdditionalOtherStockPaid-inRetainedComprehensive$5parCapitalEarningsIncomeTotal,StatementofChangesinStockholdersEquityForYearEndedDecember31,2007,StatementofChangesinStockholdersEquity,OffsettingassetsandliabilitiesLossandgaincontingenciesValuationsreportedintheBalanceSheetTerminologyComparativeStatements,AdditionalReportingIssues,Loss,Disclosure,ContingentLiabilitiesandAssets,CurrentvalueamountsgenerallyarenotshownontheBalanceSheet.Containsmanyestimates.CertainassetsandliabilitiesarenotshownontheBalanceSheet,e.g.,humanresources.,LimitationsofBalanceSheet,EconomicIncome,AccountingIncome,vs.,IncomeStatement,CapitalMaintenanceConcept,Underthisconcept,corporateincomeforaperiodoftimeistheamountthatmaybepaidtostockholdersduringthatperiodandstillenablethecorporationtobeaswelloffattheendoftheperiodasitwasatthebeginning.,ConceptsofIncome,Assumeacorporationhasnetassetsof$45,000atthebeginningand$80,000attheendoftheyear,andthatnoadditionalinvestmentsorwithdrawalsweremade.,Endingnetassets$80,000Less:Additionalinvestment0Endingnetassetsexcludinginvestment$80,000Less:Beginningnetassets(45,000)Totalincomefortheyear$35,000,CapitalMaintenanceConcept,ConceptsofIncome,Assumeacorporationhasnetassetsof$45,000atthebeginningand$80,000attheendoftheyear.Stockholdersmadeadditionalcapitalinvestmentsof$10,000.,Endingnetassets$80,000Less:Additionalinvestment(10,000)Endingnetassetsexcludinginvestment$70,000Less:Beginningnetassets(45,000)Totalincomefortheyear$25,000,CapitalMaintenanceConcept,ConceptsofIncome,TransactionalApproach,Thetransactionalapproachtoincomemeasurementisusedinaccountingtoday.,ConceptsofIncome,TransactionalApproach,Underthisconcept,acompanyrecordsitsnetassetsattheirhistoricalcost,anditdoesnotrecordchangesintheassetandliabilitiesunlessatransaction,event,orcircumstancehasoccurredthatprovidesreliableevidenceofachangeinvalue.,ConceptsofIncome,TransactionalApproach,Acorporationsnetincomeforanaccountingperiodcurrentlyismeasuredasfollows:,Netincome=RevenuesExpenses+Gains-Losses,ConceptsofIncome,Revenuesareinflows(orincreases)ofassetsofacompanyorsettlementofitsliabilitiesduringaperiodfromdeliveringorproducinggoods,renderingservices,orotheractivitiesthatarethecompanysongoingmajororcentraloperations.,Revenues,Recognitionistheprocessofformallyrecordingandreportinganiteminacompanysfinancialstatementswhentheyareearned.,RevenuesRecognition,Acompanyusuallyrecognizesrevenueatthetimegoodsaresoldorservicesarerendered.,Revenues,Expensesareoutflowsofassetsofacompanyorincurrencesofliabilitiesduringaperiodfromdeliveringorproducinggoods,renderingservices,orcarryingoutotheractivitiesthatarethecompanysongoingmajororcentraloperations.,Expenses,Causeandeffect(costofgoodssoldandcommissions)Systematicandrational(depreciation)Immediaterecognition(periodcosts),Expensesshouldbematchedorrecognizedinthesameperiodastherevenuestheyhelpgenerate.,ExpenseRecognition,Gainsandlossesarereportednet(notnetoftax)incontrasttorevenuesandexpenses,whicharereportedgross.TheyappearintheOthersectionofamultiplestepincomestatement.,GainsandLosses,Salesrevenue(net)CostofgoodssoldGrossprofitOperatingexpensesIncomefromoperationsOtheritemsIncomefromcontinuingoperationsbeforetaxIncometaxexpenserelatedtocontinuedoperationsIncomefromcontinuingoperations,1.Incomefromcontinuingoperations,IncomeStatementContent,Resultsfromdiscontinuedoperations,Income(loss)fromoperationsofdiscontinuedsignificantcomponents(netofincometaxes).Gain(loss)fromdisposalsofdiscontinuedsignificantcomponents(netofincometaxes).,IncomeStatementContent,Extraordinaryitems(netofincometaxes)NetincomeEarningspershare,IncomeStatementContent,IncomeStatement(Single-Step),IncomeStatement(Single-Step),LetStakealookataMulti-StepIncomeStatement,next.,IncomeStatement(Multiple-Step),CostofGoodsSold,GrossMargin,IncomeStatement(Multiple-Step),GrossMargin,IncomeStatement(Multiple-Step),Operatingexpensesarethoseprimaryrecurringcosts(otherthancostofgoodssold)incurredtogeneratesalesrevenue.,OperatingExpenses,GrossMargin,Non-operatingItems,IncomeStatement(Multiple-Step),GrossMargin,Non-operatingItems,IncomeStatement(Multiple-Step),Extraordinarygainsandlossesanddiscontinuedoperationsare.,Reportedseparatelyontheincomestatement.2.Shownnetofanyrelatedtaxes.,OtherItems,IncomefromcontinuingoperationsIncome(loss)fromtheoperationsofadiscontinuedcomponentGain(loss)fromthedisposalofadiscontinuedcomponentExtraordinaryitemsAnypriorperiodadjustmentsAnyitemsofothercomprehensiveincome,Incometaxexpenseismatchedagainstthefollowing:,IncomeTaxExpense,Interperiodtaxallocationinvolvesallocatingacorporationsincometaxobligationasanexpensetovariousaccountingperiodsbecauseoftemporary(timing)differencesbetweenitstaxableincomeandpretaxfinancialincome.,IncomeTaxExpense,Intraperiodtaxallocationinvolvesallocatingacorporationstotalincometaxexpenseforaperiodtothevariouscomponentsofitsnetincome,retainedearnings,andothercomprehensiveincome.,IncomeTaxExpense,Anextraordinaryitemisaneventortransactionthatisbothunusualinnatureandinfrequentinoccurrence.,Unusualnature-theunderlyingeventortransactionpossessesahighdegreeofabnormalityandisofatypeclearlyunrelatedto,oronlyincidentallyrelatedto,theordinaryandtypicalactivitiesofthecompany.,Infrequencyofoccurrence-theunderlyingeventortransactionisofatypethatisnotreasonablyexpectedtorecurintheforeseeablefuture.,ExtraordinaryItems,Unusual?,ReportGain(Loss)As,Infrequent?,Event,ExtraordinaryItems,Event,Unusual?,ReportGain(Loss)As,Infrequent?,ExtraordinaryItems,SpecificextraordinaryitemsidentifiedinthepronouncementThedirectresultofamajorcasualty(suchasanearthquake).Anexpropriation.Aprohibitionunderanewlyenactedlaworregulationthatclearlymeetsbothcriteria.,ExtraordinaryItems,Thewrite-downorwrite-offofreceivables,inventories,equipmentleasedtoothers,orintangibleassets.Gainsorlossesfromexchangesortransactionsofforeigncurrency.Gainsorlossesfromthedisposalsofabusinesscomponent.,EventsthattheAPBOpinionNo.30identifiedasnotqualifyingasextraordinary:,Continued,ExtraordinaryItems,Othergainsorlossesfromthesaleorabandonmentofproperty,plant,orequipment.Theeffectsofastrike.Theadjustmentofaccrualsonlong-termcontracts.Theeffectofaterroristattack.,EventsthattheAPBOpinionNo.30identifiedasnotqualifyingasextraordinary:,ExtraordinaryItems,Oneotheritemisrequiredtobereportedasanextraordinaryitem.AsprescribedbyFASBStatementNo.141,whenacompanypurchasesanothercompanyandpayslessthanthefairvalueoftheothercompany,itreportsthedifferenceasanextraordinarygain.,ExtraordinaryItems,During19X8,ApexCo.experiencedalossof$75,000duetoanearthquakeatoneofitsmanufacturingplantsinNashville.Thiswasconsideredanextraordinaryitem.Thecompanyreportedincomefromcontinuingoperationsof$128,387.Allgainsandlossesaresubjecttoa30%taxrate.Howwouldthisitemappearonthe19X8incomestatement?,ExtraordinaryItemsExample,ExtraordinaryItemsExample,IncomeStatementPresentation:,ExtraordinaryItemsExample,Someeventsareunusualorinfrequent,butnotboth.Forexample:restructuringcharges.gainorlossfromthesaleofassets.,IwonderhowIshouldreporttheseitems.,ReportingUnusualorInfrequentItems,IwonderhowIshouldreporttheseitems.,Psst!WhydontyoutryreportingtheminIncomefromOperations?,ReportingUnusualorInfrequentItems,Acompanymaydecideto“discontinue”someofitsoperationsandsellacomponentoftheseoperations.,Whatisacomponent?,DiscontinuedOperations,Acomponentofacompanyinvolvesoperationsandcashflowsthatcanbeclearlydistinguished,operationallyandforfinancialpurposes,fromtherestofthecompany.,Acomponentmaybeasubsidiary,anoperatingsegmentoranassetgroup.,DiscontinuedOperations,Ifacomponentofanentityhaseitherbeendisposedoforclassifiedasheldforsale,wereporttheresultsofitsoperationsseparatelyindiscontinuedoperationsiftwoconditionsaremet:,Theoperationsandcashflowsofthecomponenthavebeen(orwillbe)eliminatedfromtheongoingoperation.Theentitywillnothaveanysignificantcontinuinginvolvementintheoperationsofthecomponentafterthedisposaltransaction.,FASBStatementNo.144requiresthatallofthefollowingcriteriabemettoqualifyfor“heldforsale”:,Managementhascommittedtoaplantosellthecomponent.Thecomponentisavailableforimmediatesaleinitspresentcondition.Managementhasbegunanactiveprogramtolocateabuyer.Thesaleisprobablewithinoneyear.Thecomponentisbeingmarketedforsaleatapricethatisreasonableinrelationtocomponentsfairmarketvalue.Itisunlikelythatmanagementwillmakesignificantchangestotheplan.,HeldforSale,Twocomponentsareaccountedfor:Resultsofoperationsforthediscontinuedoperationsbeforethedisposaldecision.Gainorlossfromdisposalofasegment.,DiscontinuedOperations,Incomefromcontinuingoperations$93,000Resultsfromdiscontinuedoperations:IncomefromoperationsofdiscontinuedDivisionX(netof$2,880incometaxes)$6,720LossondisposalofDivisionX(netof$6,000incometaxcredit)(14,000)(7,280)Incomebeforeextraordinaryitems$85,720,IncomeStatement:ResultsfromDiscontinuedOperations,Notethatdiscontinuedoperationsarereportedontheincomestatementafterthecontinuingoperations,butbeforeextraordinaryitems.,IncomeStatement:ResultsfromDiscontinuedOperations,Incomefromcontinuingoperations$93,000Resultsfromdiscontinuedoperations:IncomefromoperationsofdiscontinuedDivisionX(netof$2,880incometaxes)$6,720Incomebeforeextraordinaryitems$85,720,Element1:operatingincome(loss),IncomeStatement:ResultsfromDiscontinuedOperations,Incomefromcontinuingoperations$93,000Resultsfromdiscontinuedoperations:IncomefromoperationsofdiscontinuedDivisionX(netof$2,880incometaxes)$6,720LossondisposalofDivisionX(netof$6,000incometaxcredit)(14,000)(7,280)Incomebeforeextraordinaryitems$85,720,Element2:gainorlossondisposal,IncomeStatement:ResultsfromDiscontinuedOperations,OnSeptember30,2007,DuvallCompanysellsDivisionC(acomponentofitsoperations)for$102,000andincurs$2,000oflegalfeesandclosingcosts.Atthetimeofthesale,thebookvaluesofDivisionCsassetsandliabilitiesare$150,000and$80,000,respectively.DuvallCompanyissubjecttoa30%incometaxrate.,SaleIllustration,Continued,IncomeStatement:ResultsfromDiscontinuedOperations,Netcashreceived($102,000$2,000)$100,000BookvalueofnetassetsofDivisionC:Assets$150,000Liabilities(80,000)Netbookvalue(70,000)Pretaxgain$30,000Incometax(30%)(9,000)After-taxgain$21,000,SaleIllustration,Whenacompanyclassifiesasignificantcomponentasheldforsale,itrecordsandreportsthecomponentatthelowerof(1)itsbookvalue(bookvalueofassetsminusbookvalueofliabilities)or(2)itsfairvalue(theamountatwhichtheassetsandliabilitiesasawholecouldbesoldinacurrentsingletransaction)lessanycosttosell.,SaleinaLaterAccountingPeriod,ElmoCompanyclassifiesDivisionM(asignificantcomponentofitsoperations)as“heldforsale”attheendof2007.ElmoCompanyexpectstosellDivisionMin2008atitsfairvalueof$200,0000(consistingofassetswithafairvalueof$300,000andliabilitieswithafairvalueof$100,000).Attheendof2007,thebookvalueofDivisionMis$240,000(assetsbookvalue,$330,000;liabilitiesbookvalue,$90,000).Thecompanyissubjecttoa30%incometaxrate.,Continued,SaleinaLaterAccountingPeriod,FairvalueofDivisionM$200,000BookvalueofnetassetsofDivisionM:Assets$330,000Liabilities(90,000)Netbookvalue(240,000)Pretaxloss$(40,000),DisclosuresRequiredbyFASBStatementNo.144,Adescriptionofthefactsandcircumstancesleadinguptothesale,and,ifheld-for-sale,theexpectedmannerandtimingofthesale.Therevenuesandpretaxincome(loss)ofthecomponentincludedinitsoperatingincome(loss)reportedintheresultsofdiscontinuedoperationssectionofthecompanysincomestatement.,Continued,IncomeStatement:ResultsfromDiscontinuedOperations,DisclosuresRequiredbyFASBStatementNo.144,Ifnotreportedseparatelyonitsincomestatement,thegain(loss)onthesaleandthecaptionontheincomestatementthatincludesthegain(loss).Ifnotseparatelyreportedonitsbalancesheet,thebookvalueofthemajorclassesofassetsandliabilities.,IncomeStatement:ResultsfromDiscontinuedOperations,ChangeinestimatesChangeinaccountingprincipleChangeinreportingentity,ReportingAccountingChangesc,Revisionofapreviousaccountingestimate.Thenewestimateshouldbeusedinthecurrentandfutureperiods.TheprioraccountingresultsshouldnotbedisturbedFASBStatementNo.154.,ChangeinEstimates,OnJanuary1,19X5,wepurchasedequipmentcosting$30,000,withausefullifeof10yearsandnosalvagevalue.During19X8,wedeterminethattheremainingusefullifeis5years(8-yeartotallife).Weusestraight-linedepreciation.Calculatedepreciationexpensefor19X8baseduponthisnewestimate.,ChangeinEstimatesExample,Recorddepreciationexpenseof$4,200for19X8andsubsequentyears.,ChangeinEstimatesExample,OccurswhenchangingfromoneGAAPmethodtoanotherGAAPmethod.Makeacatch-upadjustmentknownasthecumulativeeffectofachangeinaccountingprinciple.Thecumulativeeffectisreportednetoftaxesanddirectlyafterthebeginningretainedearningsamountonthecompanysretainedearningsstatement.,ChangeinAccountingPrinciple,Letsmoveontoafewfinaltopics.,EarningsPerShare.StatementofRetainedEarnings.PriorPeriodAdjustments.ComprehensiveIncome,OtherTopics,Generallycomputedasfollows:,EarningsPerSh