Chapter 4: Question 37Q (page 180)
How should the disposal of a component of a business be disclosed in the income statement?
Disclosure of a disposed component is based upon its nature, i.e., continued or discontinued.
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Bradshaw Company experienced a loss that was deemed to be both unusual in nature and infrequent in occurrence. How should Bradshaw report this item in accordance with IFRS?
Starr Co. had sales revenue of \(540,000 in 2017. Other items recorded during the year were:
Cost of goods sold \)330,000
Salaries and wages expense 120,000
Income tax expense 25,000
Increase in value of company reputation 15,000
Other operating expenses 10,000
Unrealized gain on value of patents 20,000
Prepare a single-step income statement for Starr for 2017. Starr has 100,000 shares of stock outstanding.
(Multiple-Step Statement with Retained Earnings Statement) Presented below is information related to Ivan Calderon Corp. for the year 2017.
Net sales $1,300,000 Write-off of inventory due to obsolescence 80,000
Cost of goods sold 780,000 Depreciation expense omitted by accident in 2016 55,000
Selling expenses 65,000 Casualty loss 50,000
Administrative expenses 48,000 Cash dividends declared 45,000
Dividend revenue 20,000 Retained earnings at December 31, 2016 980,000
Interest Revenue 7,000
Effective tax rate of 34% on all items
Instructions
Question: At December 31, 2016, Shiga Naoya Corporation had the following stock outstanding.
10% cumulative preferred stock, \(100 par, 107,500 shares \)10,750,000
Common stock, \(5 par, 4,000,000 shares 20,000,000
During 2017, Shiga Naoya did not issue any additional common stock. The following also occurred during 2017.
Income from continuing operations before taxes \)23,650,000
Discontinued operations (loss before taxes) \(3,225,000
Preferred dividends declared \)1,075,000
Common dividends declared $2,200,000
Effective tax rate 35%
Instructions
Compute earnings per share data as it should appear in the 2017 income statement of Shiga Naoya Corporation. (Round to two decimal places.)
Which of the following statements is correct regarding income reporting under IFRS?
(a) IFRS does not permit revaluation of property, plant, equipment, and intangible assets.
(b) IFRS provides the same options for reporting comprehensive income as GAAP.
(c) Companies must classify expenses by nature.
(d) IFRS provides a definition for all items presented in the income statement.
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