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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Jorgansen Lighting, Incorporated, manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data: Inventories: Beginning (units) Ending (units) Variable costing operating income Year 1 Year 2 Year 3 310 260 260 290 290 350 $ 1,091,400 $ 1,043,400 $ 1,007,400 The company's fixed manufacturing overhead per unit was constant at $670 for all three years. Required: 1. Determine each year's absorption costing operating income. Note: Enter any losses or deductions as a negative value. Reconciliation of Variable Costing and Absorption Costing Operating Incomes Year 1 Year 2 Year 3 Variable costing operating income Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing Absorption costing operating income