CH4. Content and Format of the Income Statement

Elements

Net income results from revenue, expense, gain and loss transactions. Two key elements are income and expenses

Intermediate components

1. Income

• Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets(자산의 증가) or decreases of liabilities(부채의 감소) that result in increases in equity, other than those relating to contributions from shareholders(주주와 관련되지 않은 자본의 증가).
• Revenues - ordinary activities of a company (total amount) : Sales, Fee, Interest, Div, Rent
• Gains - may or may not arise from ordinary activities (net amount: LT asset sales (proceeds-book value).

2. Expenses

• represent decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to shareholders.
• Expenses - ordinary activities of a company (total amount)
• Losses - may or may not arise from ordinary activities (net amount).

Gains and losses are reported separately because that is useful for assessing future cash flows.

Illustration

Condensed income statement

Some case, an I/S cannot present all the desired expense details. Total in I/S, details are in supplementary.

This a condensed version and it is more representative of the type found in practice (GM/Apple).

Company prepares supplementary schedules to support the totals.