Question

Explain in details the Income Statement Format according to ASC 225 listed below:

-Income from Continuing Operations

-Nonrecurring Items of Income

-Discountinued operations

-extraordinary items

Answer 1

Income from continuing operations

According to the Accounting Principles Board (APB) 30, income from operations does not include any items such as extraordinary items, changes in accounting principle, results of discontinued operations, or gains or losses from disposals of segments of operations.Income statement of a particular company it is essential to recognize the differences between income from continuing operations and other non-recurring items. Income from operations is generally considered the best barometer of future results. Other items, which are non-recurring, are less essential for projecting future income.

Nonrecurring items of income

A special item of income or expense, gain or loss, that is not unusual in nature for the company given its industry, location or environment. Nonetheless, the tem isn’t expected to recur. Reported as component of other income within Income from Continuing Operations. Not reported net of income tax.

Discontinued operations

income or loss from discontinued business segment, including gain or loss on disposal. Involves exiting a line-of-business entirely or disposal of a separate reporting unit. Reported separately, net of income tax.

Extraordinary items

unusual and nonrecurring gain or loss.No longer a separate line item on the income statement. Such items, including gains and losses that historically would have been considered to be extraordinary, are now reported as separate line of other income within income from continuing operations.