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Chapter 4: 1ISTQ (page 198)

Question: Which of the following is not reported in an income statement under IFRS?

(a) Discontinued operations.

(b) Extraordinary items.

(c) Cost of goods sold.

(d) Income tax.

Short Answer

Expert verified

Option b is the correct answer.

Step by step solution

01

Meaning of IFRS

The term IFRS refers to the International Financial Reporting Standards issued by the International Accounting Standards Board for presenting a company'sfinancial performance and position understandably.

02

Explanation for the correct option

An income statement prepared under the IFRS does not include the extraordinary items section. Also, it does not consider the other comprehensive income or loss like US GAAP does.

03

Explanation for the incorrect option

An income statement format of IFRS captures mainly all the items associated with revenues and expenses. It includes income and losses from discontinued operations, the cost of goods sold, and applicable tax on the net income generated by a business entity.

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Most popular questions from this chapter

What kinds of questions about future cash flows do investors and creditors attempt to answer with information in the income statement?

C.Reither Co. reports the following information for 2017: sales revenue \(700,000, cost of goods sold \)500,000, operating expenses \(80,000, and an unrealized holding loss on available-for-sale securities for 2017 of \)60,000. It declared and paid a cash dividend of \(10,000 in 2017. C Reither Co. has January 1, 2017, balances in common stock \)350,000; accumulated other comprehensive income \(80,000; and retained earnings \)90,000. It issued no stock during 2017.

Instructions

Prepare a statement of stockholders’ equity.

Identify at least two situations in which important changes in value are not reported in the income statement.

Explain the transaction approach to measuring income. Why is the transaction approach to income measurement preferable to other ways of measuring income?

Vandross Company has recorded bad debt expense in the past at a rate of 1½% of accounts receivable, based on an aging analysis. In 2017, Vandross decided to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been \(380,000 instead of \)285,000. In 2017, bad debt expense will be \(120,000 instead of \)90,000. If Vandross’s tax rate is 30%, what amount should it report as the cumulative effect of changing the estimated bad debt rate?
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