27,000, Impairment loss = Carrying amount 30,000 – Recoverable amount 27,000 = 3,000. Now you may compare the depreciation charge of an asset under straight line method and reducing balance method.

20 lacs. 1. If companies are preparing both individual and consolidated income statements, then the choice of abiding by UK GAAP and IFRS remains separate for them. For preparing consolidated income statements under GAAP, a company must have a majority (more than 50%) voting power in another company.

Now the asset will be depreciated over the remaining useful life on the basis of new depreciation charge. For this purpose profit is to be calculated as specified in section 349. You can do that with the help of these income statement templates that are provided here.

In the USA, as per the ruling of the Securities and Exchange Commission (SEC), it is mandatory to publish consolidated income statements quarterly. It is expected that such raw materials will be consumed in the production process during the next accounting period. There are two ways of presenting an income statement.

We need to sequentially compute for: First, the gross profit is computed by deducting cost of sales from sales.

It may be mentioned that Trial Balance considers the opening inventories. 1. One look at them would tell you what the income statement is all about. All revenues and gains are presented first, followed by all expenses and losses. An important component of financial statements of an entity is Statement of Comprehensive Income.

Fair value loss is transferred to Fair Value Reserve for AFS Investments. These classification are important for the purpose of presentation of balance sheet items.

This fair value gain/loss is accounted for even if the asset is not sold. Once you browse through the list of templates provided here, you can shortlist the ones you think suit your needs.

You can either present a (1) single-step income statement, or (2) multi-step income statement.

5,000), holiday passage for children studying outside India/family members staying outside India (once in a year by economy class or twice in a year by first class) and leave travel concession. – Fair value loss on Held for Trading Investments and Investment Property, + Fair value Gain on Held for Trading Investments and Investment Property, – Loss on Sale of Property, Plant and Equipment, Intangible Assets, Investment Property, Financial Assets, + Profit on Sale of Property, Plant and Equipment, Intangible Assets, Investment, + Provision for Deferred tax Income/Tax refund. Interest payable on term loan is to be worked out even if not paid (accrual) and to be charged to the Profit and Loss Account (matching).

xi. Alternatively, it is possible to take the difference between opening and closing inventories of work in progress and finished goods, and adjust to the expenses. The company decides to revalue the plant in the year 2008 by 20% of its carrying amount.

Based on prudence, inventories are valued at the lower of cost and net realizable value. Units of production method of depreciation: Under this method depreciation charge is determined on the basis of estimated production units. In view of the uncertainty attached to future events, profits are not anticipated but recognised only when realized though not necessarily in cash. Expenses incurred to raise capital or repayment of capital is adjusted to the amount of capital raised. Any transaction that relates to raising of capital or repayment thereof is capital transaction in nature. Termination benefits are also charged to the Statement of Income. Total comprehensive income attributable to: While presenting the Statement of Income various entities present different types profit, namely, gross profit, operating profit, EBITDA, Profit before tax, Profit after tax.

Preparation of income statement by trading entities: Discussed below in Example 4 the stand-alone Income Statement of a trading entity. Income includes both revenues and gains. Plus, it works as a great sample to follow while you create for your statements. Assets are further classified as current asset and non-current asset. Compensation and damages paid voluntarily; Section 350 requires depreciation charge at the rates specified in Schedule XIV of the Companies Act.

Disclosures for sales or gross turnover, purchases and stocks—. Other two are going concern and consistency which we shall discuss later on. No, that’s not the correct approach. or Rs.4,00,000 per month calculated in a scale based on effective capital: The ceiling stated above is applicable if (i) payment of remuneration is approved by a resolution passed by the Remuneration Committee, (ii) the company has not made any default in repayment of its debts, (iii) a special resolution has been passed at the general meeting of the company for the payment of such remu­neration for a period not exceeding a period of three years, and (iv) a detailed statement about the business of the company submitted to the shareholders’ along with the notice of the meeting. It is formal in nature and sticks to the correct format.

Without question, a multi-step income statement is more organized (but more complicated) than the single-step format. Percentage of profit to be transferred to reserve is applied to “current profit”.

Gross Profit is normally presented by trading entities. The financial statement should be prepared in a lucid language so that it is understandable by all stakeholders such as investors, employees, creditors, government agencies, and even the public. Interest for the period 1.1.2007 to 30.9.2008 shall be capitalised and interest for the period 1.10.2008 to 31.12.2008 shall be charged to Income Statement. Revenues are the amounts from the sale of goods and services in the normal course of business. Below is the income statement example of Max Associates, who are into legal consultancy service. A company purchases plant and machin­ery which is expected to be used in the production process for 20 years. Also it is improper to charge expense of all purchases against sale of 80 units. On 1st January, 2008, Bhuban Zinc Ltd. raised equity share capital of Rs.100 million and invests in Land Rs.40 million, Factory Building Rs.30 million, Plant and Machinery Rs.100 million and Furniture Rs.5 million.

It comprises of borrowing costs which is defined as interest and other costs that an entity incurs in connection with the borrowing of funds. The entity will collect only $ 100,000 irrespective of the exchange rate on the date of collection. Income Statement for the Year Ended 31st … (c) Fair value gain arising out of revaluation property, plant and equipment, intangible assets or financial assets are not included in revenue. It is also necessary to understand matching concept and accrual principle. Salaries and other employee benefits Rs.8 million is treated as an expense (matching) to be charged to the Profit and Loss Account. 3.

Identify revenue/income, expense/loss, assets, liabilities and shareholders’ funds.

(Revaluation surplus is presented in the Statement of Other Comprehensive Income and transferred to equity.

There are many different accounting regulations all across the world that are universally accepted by all the countries in the world and maintain standardization so that they maintain globally to keep parity and consistency.
Intangible Assets 4,000; Charge 10% amortisation.

Income Statement Format. This is reflected in the appropriation section (which is also called below the line of Indian format of the Profit and Loss Account). Revenue is presented net of taxes, discounts and rebates. In fact, for the preparation of Profit and Loss Account, we need to identify items of revenue/income and expense/loss. Here is how each would look like. For large companies on a larger scale, an income statement is an account of the profits made and the net income of annual year or during a fixed interval of time.

Thus the difference between the opening and closing inventories are adjusted. It is treated as an asset. Revaluation Surplus: Rs.61 lacs × 20% = Rs.12.20 lacs. Now draw up 3 columns. In other words, after deducting all the expenses and taxes from the revenue earned during the period, remaining is the net income from the business operation. The Companies (Transfer of Profits to Reserves) Rules, 1975 specifies percentage of profit to be transferred to reserve in case dividend is proposed. The income statement format includes details such as the company’s name, the title stating, “Income Statement”, the period covered, and other key components as discussed above.

A format of an income statement is very important as it is the means of communication of operating results to outsiders. The aforesaid eleven per cent maximum limits do not include fees payable to directors under section 309. Raw material consumed is a revenue item (expense) to be charged to Profit and Loss Account for the purpose of computing profit whereas closing stock of raw material is an asset from which economic benefit would be derived in future (matching). Study Example 9.6 (d). d. The trading companies have to disclose goods purchased, opening stock and closing stock giving break up of each class of goods traded and indicating quantities.

In the US, publicly traded companies need to file their income statements under GAAP. viii. Let us understand various concepts of profit taking an example.

Irrespective of what you call them, you can use these templates to draw up a neat and to point the income statement that doesn’t beat about the bush. Unpaid interest is generally added with the loan principal and shown as a liability.

Turnover (aggregate amount of sales effected by each class of goods indicating the quantities); commission paid to sole selling agent; commission paid to other selling agents; brokerage and discount on sales. So, the stock of raw materials should be treated as current assets. These goods were sold for Rs.3,00,000 inclusive of VAT of Rs.3,500.

Expenses are decrease in economic benefits during the accounting period in the form of outflows or depletion of assets or incurrence of liabilities that result in decreases in equity, other than those relating to distributions to equity partici­pants. All items of revenue/income have credit balance and all items of expense/loss have debit balance. Indian rupee) has increased. * @subpackage Tally
Reserve for repayment of share capital and loan, Part II of Schedule VI requires disclosure of payments provide for or made to—. c. Opening and closing stock of goods produced giving item-wise break up and indicating quantities. The Exploration and Evaluation Assets are valued at Rs.500 million. You may verify that depreciation charge for year 1 is on Rs.80 lacs @ 10.8749% and in year 2 is on Rs. Distribution tax 10%. This format uses subtotals for the gross margin, operating expenses, and non-operating expenses. An income statement summarizes a company's financial performance. Monthly or quarterly payment of remuneration: Section 198(3) clarifies that within the overall limit of maximum remu­neration, a company may pay monthly remuneration to managing or whole-time directors in accordance with section 309 or to the managers as per section 387. An oil field is having 5 billion (estimated) barrels of oil reserve. Example #2 – Multi-Step Income Statement. Whether money is paid or not is irrelevant. xviii. It would help you plan your expenses and your finances in an orderly fashion.