Multi step Income Statement: Multiple step income statement is a format in which there are multiple sub-totals for gross margin, operating expenses and other income. This layout allows the readers to gather the types of information they want to have. IFRS: It means International Financial Reporting Standards. It is a framework within which one should organize and report financial information. IFRS Practices: As per IFRS general practices, income statement is prepared using the practices which are mentioned below: • Gross profit must be computed and presented separately by deducting cost of sales from net sales. • Research and development cost, administration cost, advertisement and promotion cost must be transferred to income statement only after categorizing the relevant cost into appropriate categories. • Finance income and finance cost must be presented separately. • Net Income shall be computed only after netting off the tax expense from profit before tax. To prepare: Income statement for Company L.

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Chapter 4, Problem 20E

To determine

Multi step Income Statement:

Multiple step income statement is a format in which there are multiple sub-totals for gross margin, operating expenses and other income. This layout allows the readers to gather the types of information they want to have.

IFRS:

It means International Financial Reporting Standards. It is a framework within which one should organize and report financial information.

IFRS Practices:

As per IFRS general practices, income statement is prepared using the practices which are mentioned below:

• Gross profit must be computed and presented separately by deducting cost of sales from net sales.

• Research and development cost, administration cost, advertisement and promotion cost must be transferred to income statement only after categorizing the relevant cost into appropriate categories.

• Finance income and finance cost must be presented separately.

• Net Income shall be computed only after netting off the tax expense from profit before tax.

To prepare: Income statement for Company L.

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