Question

The FASB has developed specific guidelines for what to include in income (Income Statement) and how to report certain unusual and infrequent items.

Discuss the appropriate treatment in the income statement for the following items:

(a)	Loss on discontinued operations.

(b)	Noncontrolling interest allocation.

(c)	Earnings per share.

(d)	Unusual and Infrequent Gains and Losses.

Answer 1

a)Discontinued operations are listed separately on the income statement because it's important that investors can clearly distinguish the profits and cash flows from continuing operations from those activities that have ceased.

b)The non controlling interest shall be reported in the consolidated statement of financial position within equity, seperately from parent equity . Non controlling interests are measured at the net asset value of entities and do not account for potential voting rights. The amount shall be clearly labelled as non controlling interest in subsidiaries .

c)Earnings per share must appear on the face of the income statement if the corporation's stock is publicly traded. The earnings per sharecalculation is the after tax net income available for the common stockholders divided by the weighted average number of common shares outstanding during that period.

d)Examples of unusual or infrequent items include gains or losses from a lawsuit , lossesor slowdown of operations due to natural disasters,restructuring costs, gains or lossesfrom the sale of assets ,costs associated with acquiring another business ,losses from the early retirement of debt ,and plant shutdown costs.

An extraordinary loss is reported as a separate line item in the income statement, net of taxes, and after the results of operations.