tailieunhanh - Lecture Introduction to Accounting: An integrated approach: Chapter 17 - Penne Ainsworth, Dan Deines

Chapter 17 - Company performance: Profitability . After completing this chapter, students will be able to: Discuss the importance of income from continuing operations and net income; describe the purpose of, and calculate, earnings per share and diluted earnings per share; explain the purpose of, and calculate, income using variable, absorption, and throughput costing for internal reporting purposes. | Chapter 17 Company Performance: Profitability Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17- What are the Components of Comprehensive Income? Revenues less expenses plus gains less losses = earnings (income from continuing operations before taxes) Income from continuing operations before taxes less income tax expense (provision for income taxes) = income from continuing operations 17- Comprehensive Income Continued Income from continuing operations plus or minus: Discontinued operations (net of tax) Extraordinary items (net of tax) Equals net income Net income plus or minus: Other comprehensive income items Equals comprehensive income 17- What are the Components of Earnings? Revenues Less cost of goods sold Gross margin Less operating expenses Income from operations Add other revenues and gains Less other expenses and losses Income from continuing operations before taxes Less income tax expense (provision for income tax) Income from continuing operations 17- What are Discontinued Operations? Segment of the business has been sold or otherwise disposed of Profit or loss from operations of the segment prior to closing (net of tax) Gain or loss from selling the segment (net of tax) 17- What are Extraordinary Items? Unusual and infrequent Gain or loss from extraordinary item (net of tax) 17- What are Other Comprehensive Income Items? Items that have not been “realized” and, therefore, are not included in income, but which affect profitability comparisons Foreign currency translation adjustments, pension liability adjustments, unrealized gains and losses from available-for-sale securities (net of tax) Typically shown on the Statement of Owners’ Equity (Chapter 18) Unrealized Holding Gains/Losses Nonoperational investments Trading securities Available-for-sale securities Change in the market value of a group of “like” securities Trading—unrealized holding gain/loss shown in current period net income . | Chapter 17 Company Performance: Profitability Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17- What are the Components of Comprehensive Income? Revenues less expenses plus gains less losses = earnings (income from continuing operations before taxes) Income from continuing operations before taxes less income tax expense (provision for income taxes) = income from continuing operations 17- Comprehensive Income Continued Income from continuing operations plus or minus: Discontinued operations (net of tax) Extraordinary items (net of tax) Equals net income Net income plus or minus: Other comprehensive income items Equals comprehensive income 17- What are the Components of Earnings? Revenues Less cost of goods sold Gross margin Less operating expenses Income from operations Add other revenues and gains Less other expenses and losses Income from continuing operations before taxes Less income tax expense (provision for income tax) .