Skip to main content

Business Accounting Accounting Principles 12th Edition

(a) Income Statement: Income statement is prepared by all the companies by enumerating all the expenses and revenues in the statement to calculate the resulting difference of Net Profit or Net Loss. Single-step Income Statement: Single-step income statement is the income statement with a format that deducts all the expenses from the revenues without any classification. Multiple-step Income Statement: It refers to a income statement with a format that deducts the expenses from the revenues with classification. It clearly bifurcates the profit at different levels as gross profit, operating income and net profit. To determine: The income statement format used by L Company as single-step or multiple-step Answer: The format of income statement used by L Company is multiple-step income statement. Explanation: The consolidated income statement of the company shows gross margin for the year after deducting cost of sales from the revenue. The company deducts all the operating expenses to reach the operating income for the year. Then, the cost of financial debts and other financial incomes and expenses are deducted and added to reach the net financial income. Thereafter, to calculate the net profit, income taxes are deducted. Since, the consolidated income statement of L Company shows various bifurcations of expenses and revenues, thus, it can be concluded that the company uses Multiple-step Income Statement. Conclusion: Th L Company uses multiple-step income statement format. (b) To determine: Label used by L Company for interest costs Answer: The label used by L Company for interest costs is cost of net financial debt (Refer Appendix F). Explanation: Interest expense is the expense paid on the money borrowed by the company from an outside source. There can various labels be used to show the same in an income statement, such as, interest expense, interest cost, finance cost etc. Company L uses “cost of net financial debt” as the label for interest cost in its income statement. Conclusion: The label used for interest costs by L Company is cost of net financial debt. (c) (1) To determine: On basis of financial statements Composition of inventory. Explanation: The composition of inventory of L Company is mentioned below: Raw material and work-in-process goods which are not yet ready to sell. Finished goods which are ready for sale. Goods purchased from outside for resale. Wines and Eaux-de-vie which are not to be sold immediately but are preserved for aging before sale. (2) To determine: On basis of financial statements Amount of inventory before impairment. Answer: The amount of gross inventory before impairment is €9,650 million (Refer Appendix F).

(a) Income Statement: Income statement is prepared by all the companies by enumerating all the expenses and revenues in the statement to calculate the resulting difference of Net Profit or Net Loss. Single-step Income Statement: Single-step income statement is the income statement with a format that deducts all the expenses from the revenues without any classification. Multiple-step Income Statement: It refers to a income statement with a format that deducts the expenses from the revenues with classification. It clearly bifurcates the profit at different levels as gross profit, operating income and net profit. To determine: The income statement format used by L Company as single-step or multiple-step Answer: The format of income statement used by L Company is multiple-step income statement. Explanation: The consolidated income statement of the company shows gross margin for the year after deducting cost of sales from the revenue. The company deducts all the operating expenses to reach the operating income for the year. Then, the cost of financial debts and other financial incomes and expenses are deducted and added to reach the net financial income. Thereafter, to calculate the net profit, income taxes are deducted. Since, the consolidated income statement of L Company shows various bifurcations of expenses and revenues, thus, it can be concluded that the company uses Multiple-step Income Statement. Conclusion: Th L Company uses multiple-step income statement format. (b) To determine: Label used by L Company for interest costs Answer: The label used by L Company for interest costs is cost of net financial debt (Refer Appendix F). Explanation: Interest expense is the expense paid on the money borrowed by the company from an outside source. There can various labels be used to show the same in an income statement, such as, interest expense, interest cost, finance cost etc. Company L uses “cost of net financial debt” as the label for interest cost in its income statement. Conclusion: The label used for interest costs by L Company is cost of net financial debt. (c) (1) To determine: On basis of financial statements Composition of inventory. Explanation: The composition of inventory of L Company is mentioned below: Raw material and work-in-process goods which are not yet ready to sell. Finished goods which are ready for sale. Goods purchased from outside for resale. Wines and Eaux-de-vie which are not to be sold immediately but are preserved for aging before sale. (2) To determine: On basis of financial statements Amount of inventory before impairment. Answer: The amount of gross inventory before impairment is €9,650 million (Refer Appendix F).

Accounting Principles 12th Edition

Accounting Principles 12th Edition

12th Edition

ISBN: 9781119263111

Author: Kimmel, Kieso Weygandt

Publisher: WILEY

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 5, Problem 5.3IFRS

Chapter 6, Problem 1Q

Chapter 5 Solutions

Accounting Principles 12th Edition

Ch. 5 - Prob. 1Q Ch. 5 - Prob. 2Q Ch. 5 - Prob. 3Q Ch. 5 - Prob. 4Q Ch. 5 - 5. When is cost of goods sold determined in a...Ch. 5 - Prob. 6Q Ch. 5 - Prob. 7Q Ch. 5 - Prob. 8Q Ch. 5 - Prob. 9Q Ch. 5 - Prob. 10Q

Ch. 5 - Prob. 11Q Ch. 5 - Prob. 12Q Ch. 5 - Prob. 13Q Ch. 5 - Prob. 14Q Ch. 5 - Prob. 15Q Ch. 5 - Prob. 16Q Ch. 5 - 17. Identify the distinguishing features of an...Ch. 5 - Prob. 18Q Ch. 5 - Prob. 19Q Ch. 5 - Prob. 20Q Ch. 5 - Prob. 21Q Ch. 5 - Prob. 22Q Ch. 5 - Prob. 23Q Ch. 5 - Prob. 5.1BE Ch. 5 - BE5-2 Presented below are the components in Veasy...Ch. 5 - Prob. 5.3BE Ch. 5 - Prob. 5.4BE Ch. 5 - Prob. 5.5BE Ch. 5 - Prob. 5.6BE Ch. 5 - Prob. 5.7BE Ch. 5 - Prob. 5.8BE Ch. 5 - Prob. 5.9BE Ch. 5 - Prob. 5.10BE Ch. 5 - Prob. 5.11BE Ch. 5 - Prob. 5.12BE Ch. 5 - Prob. 5.13BE Ch. 5 - Prob. 5.14BE Ch. 5 - Prob. 5.15BE Ch. 5 - Prob. 5.16BE Ch. 5 - Prob. 5.1DIE Ch. 5 - Prob. 5.2DIE Ch. 5 - Prob. 5.3DIE Ch. 5 - Prob. 5.4DIE Ch. 5 - Prob. 5.5DIE Ch. 5 - E5-1 Mr. McKenzie has prepared the following list...Ch. 5 - Prob. 5.2E Ch. 5 - Prob. 5.3E Ch. 5 - Prob. 5.4E Ch. 5 - Prob. 5.5E Ch. 5 - Prob. 5.6E Ch. 5 - Prob. 5.7E Ch. 5 - Prob. 5.8E Ch. 5 - Prob. 5.9E Ch. 5 - Prob. 5.10E Ch. 5 - E5-11 An inexperienced accountant for Stahr...Ch. 5 - Prob. 5.12E Ch. 5 - Prob. 5.13E Ch. 5 - Prob. 5.14E Ch. 5 - Prob. 5.15E Ch. 5 - Prob. 5.16E Ch. 5 - Prob. 5.17E Ch. 5 - Prob. 5.18E Ch. 5 - Prob. 5.19E Ch. 5 - Prob. 5.20E Ch. 5 - Prob. 5.21E Ch. 5 - Prob. 5.22E Ch. 5 - Prob. 5.1AP Ch. 5 - Prob. 5.2AP Ch. 5 - Prob. 5.3AP Ch. 5 - Prob. 5.4AP Ch. 5 - Prob. 5.5AP Ch. 5 - Prob. 5.6AP Ch. 5 - Prob. 5.7AP Ch. 5 - Prob. 5.8AP Ch. 5 - Prob. 5.1BYP Ch. 5 - Prob. 5.2BYP Ch. 5 - Prob. 5.3BYP Ch. 5 - Prob. 5.4BYP Ch. 5 - BYPS-5 Three years ago, Amy Hessler and her...Ch. 5 - Prob. 5.6BYP Ch. 5 - Prob. 5.7BYP Ch. 5 - Prob. 5.8BYP Ch. 5 - Prob. 5.1IFRS Ch. 5 - IFRS5-2 For each of the following income statement...Ch. 5 - Prob. 5.3IFRS Ch. 5 - Prob. 5.4IFRS

Knowledge Booster

Background pattern image

Recommended textbooks for you

FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education

Text book image

FINANCIAL ACCOUNTING

Accounting

ISBN:9781259964947

Author:Libby

Publisher:MCG

Text book image

Accounting

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:Cengage Learning,

Text book image

Accounting Information Systems

Accounting

ISBN:9781337619202

Author:Hall, James A.

Publisher:Cengage Learning,

Text book image

Horngren's Cost Accounting: A Managerial Emphasis...

Accounting

ISBN:9780134475585

Author:Srikant M. Datar, Madhav V. Rajan

Publisher:PEARSON

Text book image

Intermediate Accounting

Accounting

ISBN:9781259722660

Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:McGraw-Hill Education

Text book image

Financial and Managerial Accounting

Accounting

ISBN:9781259726705

Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:McGraw-Hill Education

SEE MORE TEXTBOOKS