Day 535 of Roadwork Training in Wheelchair.

HOLY ROSARY FROM LOURDES - 2023-03-31

Catholic Daily Mass - Daily TV Mass - March 31, 2023

BABYMETAL - Divine Attack - 神撃 - (OFFICIAL VISUALIZER)

Accounting: The Language of Business - Vol. 2 (Intermediate: Part 60)

I talked to one accountant, a very nice fellow who I would have been glad to have his family marry into mine. He said, "What these other accounting firms have done is very unethical. The [tax avoidance scheme] works best if it's not found out [by the IRS], so we only give it to our best clients, not the rest, so it's unlikely to be discovered. So my firm is better than the others." [Laughter] I'm not kidding. And he was a perfectly nice man. People just follow the crowd...Their mind just drifts off in a ghastly way.

Charlie Munger

Statements of Net Income and Comprehensive Income (Part O)

by

Charles Lamson

EXAMPLE 5.4 Computation of Stockholders' Equity

PROBLEM: Starling Corporation started the year on January 1 with the following balances in the stockholders' equity on its balance sheet.

It reported the following items and transactions with owners during the current year:

What is the amount of Starling's retained earnings, contributed capital, and accumulated other comprehensive income at the end of the year?

Use the following template to prepare a Statement of Stockholders' Equity and answer the questions.

SOLUTION: We first identify the components of stockholders' equity associated with each line item and transactions with owners.

Next, we place the beginning balances in the template and add the income items and transactions with owners in the appropriate columns. We compute other comprehensive income as follows:

 

Finally, we compute the totals across rows and down columns.

At the end of the year, retained earnings is $842,000, contributed capital is $842,000 ($122,000 +  $722,000), and accumulated other comprehensive income is $39,000.

Exhibit 5.19 presents Kimberly-Clark's 2016 Statement of Stockholders Equity. The first column reports the number of issued shares of common stock. The second column reports the dollar amount of common stock issued and the third the amount of additional paid-in-capital. The number of shares and dollar amount in treasury stock, which reduces equity, is in the next two columns, Retained earnings is in the sixth column, which increases with net income and decreases with dividends. The second to last column presents accumulated other comprehensive income. The last column represents the non-controlling interest.

EXHIBIT 5.19 Statement of Stockholders' Equity, Kimberly-Clark Corporation, Financial Statements, December 31, 2016

(https://www.kimberly-clark.com/-/media/kimberly/pdf/annual-report/kmb-2016-

10k_umbracofile.pdf)

Stockholders Equity Requirements: IFRS. Unlike U.S. GAAP, IFRS requires a statement of stockholders' equity.

*GORDON, RAEDY, SANNELLA, 2019, INTERMEDIATE ACCOUNTING, 2ND ED., PP. 200-201*

end

Catholic Daily Mass - Daily TV Mass - March 30, 2023

Day 534

Rosary from Lourdes - 30/03/2023

Day 533 of Roadwork Training in Wheelchair

Rosary from Lourdes - 29/03/2023

Tinariwen - Live on KEXP

EWTN Norge Daily TV Mass – March 29, 2023

TINARIWEN - LIVE Sweden 2012

Rosary from Lourdes - 28/03/2023

EWTN Norge Daily TV Mass – March 28, 2023

Rosary from Lourdes - 27/03/2023

EWTN Norge Daily TV Mass – March 27, 2023

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Crown Chakra Activation Pure Tone (20 min) (HQ)

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Rosary from Lourdes - 26/03/2023

Catholic Daily Mass - Daily TV Mass - March 26, 2023

Full Audiobook: Genghis Khan and the Making of the Modern World

Catholic Daily Mass - Daily TV Mass - March 25, 2023

Rosary from Lourdes - 25/03/2023

Holy Wars: The Punishment Due by Megadeth (Cover by Commander Crow Man f...

Accounting: The Language of Business - Vol. 2 (Intermediate: Part 59)

Today brands are everything, and all kinds of products and services - from accounting firms to sneaker makers to restaurants - are figuring out how to transcend the narrow boundaries of their categories and become a brand surrounded by a Tommy Hilfiger-like buzz.

Tom Peters

Statements of Net Income and Comprehensive Income (Part N)

by

Charles Lamson

The Statement of Stockholders' Equity

The statement of stockholders' equity is a financial statement that summarizes the changes in stockholders' equity during a period and includes the following accounts:

1. Contributed capital account (e.g., common stock, preferred stock, and paid-in capital in excess of par) related to investments by owners

2. Retained earnings, including net income (loss) and distributions to owners

3. Accumulated other comprehensive income, also called reserves under IFRS (A later post discusses these accounts in detail.)

4. Treasury stock

5. Noncontrolling interests

Although the balance sheet reports the final balances in each of these accounts, the statement of stockholders' equity provides an analysis of the changes in these accounts for the year.

Stockholders' Equity Requirements

Although U.S. GAAP does not require a statement of stockholders equity, it is required by the SEC. Thus, U.S. non-public companies are not required to provide the statement of stockholders' equity with their financial statements. However, most non-public companies do include a statement of stockholders' equity on a voluntary basis.

 Statement of Stockholders' Equity Accounts

In general, changes in contributed capital accounts are related to additional investments by equity investors and purchases and disposals of treasury stock by the entity. the net income (or loss) of the entity along with dividend declarations result in changes to the entity's retained earnings. Items included in other comprehensive income close into accumulated other comprehensive income.

Exhibit 5.18 illustrates the equity components changed by net income, comprehensive income, and transactions with owners. Net income increases retained earnings whereas net losses and dividends decrease retained earnings. also, positive other comprehensive income will increase accumulated other comprehensive income, and negative other comprehensive income (loss) will decrease accumulated other comprehensive income.

Finally, share issuances and the sale of treasury shares increase contributed capital, while share repurchases decrease it. 

EXHIBIT 5.18 Income Transactions with Owners in the Statement of Stockholders' Equity

*GORDON, RAEDY, SANNELLA, 2019, INTERMEDIATE ACCOUNTING, 2ND ED., PP. 198,200*

end

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Rosary from Lourdes - 24/03/2023

For help and guidance, and please, Lord, God of Hosts, just be with Commander Crow Man from Hell during the making of his music video to be posted later today. Amen.

EWTN Norge Daily TV Mass – March 24, 2023

For graces and blessings in Commander Crow Man from Hell's upcoming music video to be posted later today.

Rosary from Lourdes - 23/03/2023

EWTN Norge Daily TV Mass – March 23, 2023

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EWTN Norge Daily TV Mass – March 22, 2023

Rosary from Lourdes - 22/03/2023

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Day 526 of Roadwork Training in Wheelchair.

EWTN Norge Daily TV Mass – March 21, 2023

Rosary from Lourdes - 21/03/2023

Accounting: The Language of Business - Vol. 2 (Intermediate: Part 58)

The colossal mess in Vatican finances that [Pope] Francis inherited has been cleaned up, and cleaned out. Real budgeting and accounting procedures are in place; so are real professionals, not somebody's nephew.

George Weigel

Statements of Net Income and Comprehensive Income (Part M)

by

Charles Lamson

Statement of Comprehensive Income Elements: International Financial Reporting Standards (IFRS)

The presentation of the statement of comprehensive income is similar under U.S. GAAP and IFRS---but the line items (items that appear on a separate line) can vary, depending on whether the standard setter allows certain items to go through OCI [Other comprehensive income (OCI) includes revenues, expenses, gains, and losses that have yet to be realized and are excluded from net income on an income statement. OCI represents the balance between net income and comprehensive income (Investopedia).] rather than net income (IASC, International Accounting Standard I, “Presentation of Financial Statements,” Paragraph 7). In addition to the three items that go through other comprehensive income under U.S. GAAP, IFRS also allows companies to revalue long-lived assets and include the upward revaluations in OCI.

Statement of Comprehensive Income Format

We established in Part 57 that companies can present the elements of OCI in a separate statement or combined with the elements of net income into one statement. In the two statement approach, companies first present the statement of net income, followed by a separate statement of comprehensive income. The statement of comprehensive income begins with net income and then presents the elements of OCI to arrive at comprehensive income for the period. In the one statement approach, companies first present the elements of net income followed by the elements of OCI, netting to the comprehensive income for the period.

Companies may apply the tax effects to the OCI items in total or to each individual item comprising other comprehensive income. The majority of companies use the two-statement approach. With the two statement approach, net income retains its emphasis as the primary income measure.

As we will discuss in a later post, the standards require companies to report the accumulated balance of other comprehensive income in the stockholders' equity section of the balance sheet. The codification presents examples of the income statements under both approaches. We extend the Puppini Products income statement example from Exhibit 5.6 in Part 49 to include other comprehensive income. Exhibit 5.15 presents the two statement approach, and Exhibit 5.16 presents the one statement approach. Notice that net income and other comprehensive income are the same in both exhibits; only the presentation and formatting differ.

Exhibit 5.15 Statements of Net Income and Comprehensive Income: Two-Statement Approach

EXHIBIT 5.16 Statement of Comprehensive Income: One Statement Approach

Exhibit 5.8 (from Part 49 and reintroduced below) and 5.17 (below) illustrate Kimberly-Clark's use of the two-statement approach. Note that its statement of comprehensive income begins with net income from its statement of net income in Exhibit 5.8. Two main other comprehensive income items in 2016 are $(107) million of loss from foreign currency translation adjustments and loss of $(113) million from post retirement adjustments. Each of these items is reported net of tax. In all years presented, Kimberly-Clark's comprehensive income attributable to stockholders was lower than its net income.

EXHIBIT 5.8 Income Statement, Kimberly-Clark Corporation, Financial Statement, December 31, 2016 (https://www.kimberly-clark.com/-/media/kimberly/pdf/annual-report/kmb-2016-10k_umbracofile.pdf)

EXHIBIT 5.17 Statement of Comprehensive Income, Kimberly-Clark Corporation, Financial Statement, December 31, 2016

*GORDON, RAEDY, SANNELLA, 2019, INTERMEDIATE ACCOUNTING, 2ND ED., PP. 195-198*

end

Overkill with Commander Crow Man from Hell: The Harbinger of Doom (Episo...

Rosary from Lourdes - 20/03/2023

EWTN Norge Daily TV Mass – March 19, 2023

EWTN Norge Daily TV Mass – March 19, 2023

Rosary from Lourdes - 19/03/2023

Catholic Daily Mass - Daily TV Mass - March 18, 2023

Rosary from Lourdes - 18/03/2023

Rosary from Lourdes - 17/03/2023

Catholic Daily Mass - Daily TV Mass - March 17, 2023

Catholic Daily Mass - Daily TV Mass - March 16, 2023

Rosary from Lourdes - 16/03/2023

Overkill with Crow Man from Hell: Episode 1

Day 520 of Roadwork Training in Wheelchair

Rosary from Lourdes - 15/03/2023

EWTN Norge Daily TV Mass – March 15, 2023

963 Hz Sahasrara The Crown Chakra

Powerful Crown Chakra Activation [Binaural Beats] 1HR

Rosary from Lourdes - 14/03/2023

EWTN Norge Daily TV Mass – March 14, 2023

Accounting: The Language of Business - Vol. 2 (Intermediate: Part 57)

Oil production, energy production are growing, though the latter has gone down by about 1 percent here, I believe... By the way, we occupy the first place in the world in gas export, accounting for 20 percent of the world market. We are also first in the sphere of liquid hydrocarbons export.

Vladimir Putin

Statements of Net income and Comprehensive Income (Part L)

by

Charles Lamson

Net income, Noncontrolling Interest and Earnings per Share

Companies present net income on the income statement after discontinued operations. We discuss net income and two other items related to net income---noncontrolling interest and earnings per share---in this section. 

Net income is the sum of the income from continuing operations and income, gains, or losses from discontinued operations. Companies commonly separate net income into net attributable to their stockholders and net income attributable to the noncontrolling interests. Companies close net income attributable to their shareholders to retained earnings.

There is a noncontrolling interest when one company controls another company (e.g., a subsidiary) but owns less than 100% of its voting shares. The controlling company adds all of the subsidiary's income to its own because it controls the subsidiary's ability to generate income. however, because it does not own 100% of the subsidiary, the controlling company must identify the amount that is attributable to noncontrolling owners. The noncontrolling interest line item on the income statement represents the income attributable to the portion of a subsidiary owned by others (We briefly discuss noncontrolling interest in this post because it is a common item reported on the income statement. The accounting for the ownership and control of other companies is commonly covered in advanced accounting courses and texts.) The portion of income (loss) attributed to the noncontrolling interest is deduced (added) on the income statement to arrive at income attributed to the controlling interest.

Exhibit 5.8, shown previously in Part 49 and reintroduced below, presents the net income statement of Kimberly-Clark Corporation. Kimberly-Clark reported $2,219 million of net income in 2016. Of this, $2,166 million is attributable to its shareholders and will be added to retained earnings, and $53 million is attributable to the noncontrolling interests. 

EXHIBIT 5.8 Income Statement, Kimberly-Clark Corporation, Financial Statement, December 31, 2016 (https://www.kimberly-clark.com/-/media/kimberly/pdf/annual-report/kmb-2016-10k_umbracofile.pdf)

Earnings per share represents the amount of earnings assigned to each outstanding share of the company's common stock. Companies report earnings per share for continuing operations, discontinued operations, and net income in a supplemental section of the income statement, directly below net income or loss for the period. Companies report earnings per share on both a basic and diluted basis. We will cover the computation of earnings per share in a later post.

The Statement of Comprehensive Income

So far we have focused our discussion on the statement of net income, which does not include other comprehensive income (OCI). Companies may choose to report comprehensive income in one statement (usually called the statement of comprehensive income) or in two consecutive statements (the statement of net income and the statement of comprehensive income). The primary difference is whether a firm presents the income statement(s) on one page or two. In this section, we outline the elements presented and the format used for the statement of comprehensive income, note that these areas are consistent between the one and two statement alternatives.

Companies presenting in two statements are required to include the statement of comprehensive income immediately after the statement of net income (i.e, on the next page of the financial report). The statement of comprehensive income begins with net income and then presents the components of other comprehensive income, ultimately arriving at a figure for comprehensive income. Firms presenting one statement of comprehensive income combine the statement of net income with a presentation of OCI.

Statement of Comprehensive Income Elements

The codification [In US accounting practices, the Accounting Standards Codification is the current single source of United States Generally Accepted Accounting Principles. It is maintained by the Financial Accounting Standards Board (Wikipedia).]  does not clearly define the concepts of net income versus OCI. However, U.S. GAAP provides a full list of the elements that should be included in OCI. The key line items consist of:

1. Unrealized gains and losses from the available for sale portfolio of debt investment securities and derivatives classified as cash flow hedges.

2. Foreign currency translation gains and losses.

3. On recognized pension costs (benefits)  from adjustments needed to bring the accounting pension asset or liability to the funded status of the pension plan.

The items reported as other comprehensive income typically have at least one of these three characteristics:

1. There is a low probability of cash realization in the short run.

2.  These items are transitory components of income; excluding them from the income statement reduces earnings volatility.

3. The majority of these items are not part of the entity's normal operations.

Although not included in the net income statement, the disclosure of OCI items significantly improves the usefulness of the financial statements. For example, the disclosure of the unrealized gain or loss on available for sale investments can enhance an analyst's ability to understand how effectively a company is managing its investment portfolio. This information also assists the analyst in identifying potential realized gains or losses on future disposals of the investments. Similarly, OCI will provide information regarding future realized gains or losses from the sale of assets held by foreign subsidiaries or the liquidation of insignificant pension obligations. 

*GORDON, RAEDY, SANNELLA, 2019, INTERMEDIATE ACCOUNTING, 2ND ED., PP. 193-195*

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