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Cultura Documentos
Chapter
12
McGraw-Hill/Irwin
Slide 12-2
McGraw-Hill/Irwin
Slide 12-3
Ross Corporation Income Statement For the Year Ended December 31, 2003
Net Sales Cost of goods sold Gross margin Operating expenses: Selling expenses General & Admin. exp. Loss on settlement of lawsuit Income taxes Income from Continuing Operations Discontinued Operations Extraordinary Items Cumulative effect of a change in accounting principle Net income
McGraw-Hill/Irwin
$ $
This tax expense $ does not include 1,500,000 920,000 effects of unusual, 80,000 nonrecurring items. 300,000 2,800,000
700,000 These unusual, 245,000 (70,000) nonrecurring items $
Slide 12-4
Discontinued Operations
When management enters into a formal plan to sell or discontinue a segment of the business, the related gains and losses must be disclosed on the income statement.
Discontinued Operations
Slide 12-5
Discontinued Operations
When management enters into a formal plan to sell or discontinue a segment of the business, the related gains and losses must be disclosed on the income statement.
A segment must be a separate line of business activity or an operation that services a distinct category of customers.
McGraw-Hill/Irwin
Slide 12-6
Slide 12-7
McGraw-Hill/Irwin
Slide 12-8
McGraw-Hill/Irwin
Slide 12-9
Extraordinary Items
Material in amount. Gains or losses that
are both unusual in nature and not expected to recur in the foreseeable future. Reported net of related taxes.
McGraw-Hill/Irwin
Slide 12-10
Slide 12-11
E E E E ?
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
k ? ?
Slide 12-12
Accounting Changes
Type of Accounting Change
Change in Accounting Principle Change in Accounting Estimate
Definition
Replaces one GAAP with another Revision of an estimate because of new information or new experience
McGraw-Hill/Irwin
Slide 12-13
one GAAP method to another GAAP method. Make a catch-up adjustment known as the cumulative effect of a change in accounting principle. The cumulative effect is reported net of taxes and after extraordinary items.
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Slide 12-14
McGraw-Hill/Irwin
Slide 12-15
122,
4 ? , 168, ?
The McGraw-Hill Companies, Inc., 2002
Slide 12-16
Change in Estimates
Revision of a previous
accounting estimate. The new estimate should be used in the current and future periods. The prior accounting results should not be disturbed.
McGraw-Hill/Irwin
Slide 12-17
Slide 12-18
$ $
Slide 12-19
Slide 12-20
Price-Earnings Ratio
Slide 12-21
et = Income
Based on the number of shares issued and the length of time that number remained unchanged.
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Slide 12-22
McGraw-Hill/Irwin
Slide 12-23
I i I l i i l i l
i i
i i i i i i
, , , , , ,
. . . . . 9 . *
* Rounded.
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Slide 12-24
Slide 12-25
Slide 12-26
Dividend Dates
Date of Declaration
Da te
De scription
De bit
Cre dit
$$$$ $$$$
McGraw-Hill/Irwin
Slide 12-27
Dividend Dates
Ex-Dividend Date
The day which serves as the ownership cut-off point for the receipt of the most recently declared dividend.
Date
Description
Debit
Credit
NO ENTRY
McGraw-Hill/Irwin
Slide 12-28
Dividend Dates
Date of Record
Stockholders holding shares on this date will receive the dividend. (No entry)
X
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Slide 12-29
Dividend Dates
Date of Payment
Da te
De scription
De it
re dit
McGraw-Hill/Irwin
Slide 12-30
$100
8%
$8 2,500 $20,000 $20,000. a. Debit Retained Earnings total dividend b. Debit Dividends Payable $20,000. c. Credit Dividends Payable $20,000. d. Credit Preferred Stock $20,000.
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Slide 12-31
Slide 12-32
r fS t t i P rV l S r
McGraw-Hill/Irwin
Slide 12-33
McGraw-Hill/Irwin
Slide 12-34
Comprehensive Income
Normally, there are 3 ways that financial position can change.
Payment of Dividends
GAAP excludes some unrealized items from income, such as the change in market value of available-for-sale debt and equity investments.
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002
Slide 12-35
Comprehensive Income
GAAP requires that unrealized items that are normally reported on the balance sheet be added back to compute Comprehensive Income.
McGraw-Hill/Irwin
Slide 12-36
Hang in there! Were coming down the home stretch! Yeah, thats easy for you to say!
End of Chapter 12
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2002