AccountingChap012Notes.pptVIP

Reporting the Results of Operations Discontinued Operations Discontinued Operations Discontinued Operations Discontinued Operations Discontinued Operations Extraordinary Items Material in amount. Gains or losses that are both unusual in nature and not expected to recur in the foreseeable future. Reported net of related taxes. Extraordinary Items Extraordinary Items - Example Accounting Changes Change in Accounting Principle Occurs when changing from one GAAP method to another GAAP method. Make a catch-up adjustment known as the cumulative effect of a change in accounting principle. The cumulative effect is reported net of taxes and after extraordinary items. Change in Accounting Principle Change in Accounting Principle Change in Estimates Revision of a previous accounting estimate. The new estimate should be used in the current and future periods. The prior accounting results should not be disturbed. Change in Estimates Change in Estimates Price-earnings Ratio (P/E) Earnings Per Share (EPS) Earnings Per Share (EPS) Earnings Per Share (EPS) Earnings Per Share (EPS) Accounting for Cash Dividends Dividend Dates Dividend Dates Dividend Dates Dividend Dates Dividend Dates Accounting for Stock Dividends Summary of Effects of Stock Dividends and Stock Splits Prior Period Adjustments Statement of Retained Earnings with Prior Period Adjustment Comprehensive Income Comprehensive Income Stockholders’ Equity Section of the Balance Sheet End of Chapter 12 Stockholders receive a return on their investment in two ways: one is through increases in the market value of the stock and one is through cash dividends. To pay a cash dividend, a corporation must have two things. Sufficient retained earnings to absorb the dividend with out going negative and Enough cash to pay the dividend. Dividends are not legally required but rather are declared at the discretion of the Board of Directors. When the dividends are declared, a liability is created. There are three important dates to