intermediate accounting The Income Statement参考.ppt

The Income Statement Learning Objectives Define the concept of income. Learning Objectives Describe the specific components of an income statement. Income Determination The financial capital maintenance concept assumes that a company has income “only if the dollar amount of an enterprise’s net assets at the end of the period exceeds the dollar amount of net assets at the beginning of the period after excluding the effects of transactions with owners. Financial Capital Maintenance Financial Capital Maintenance Physical Capital Maintenance Results only if production capacity at the end of the period exceeds capacity at the beginning of the period. Capacity is measured by replacement cost of net assets. Income/loss is the difference between replacement cost and net realizable value. Difference between historical cost and replacement cost is considered a capital maintenance adjustment and not part of income. Transaction Approach To provide detail concerning the components of income, accountants have adopted a transaction approach to measuring income that stresses the direct computation of revenues and expenses. Revenue and Gain Recognition Revenue is recognized when goods or services have been provided and the customer commits to payment. Revenues and gains are recognized when: They are realized or realizable, and They have been earned through substantial completion of the activities involved in the earnings process. If a market exists for a product so that its sale at an established price is practically ensured without significant selling effort, revenue may be recognized at the point of completed production. Later Recognition If payment for products or services is considered doubtful, revenues and gains may be recognized as the cash is received. Installment sales method Cost recovery method Expense and Loss Recognition Form of the Income Statement Form of the Income Statement Components of the Income Statement Revenue Cost of goods sold Operating expenses Other reve