Case study question 007

7.3 million), explanatory notes to the financial statements would be necessary. 2. Gross Profit Gross profit is its own line item on the income statement. However, it is not actually a "section" of the income statement, but it is an important part of the financial statement. According to the codification ASC 360-20-55-14, "gross profit is presented as a separate item of revenue on the income statement when it is recognized as earned." Gross profit is equal to net sales less cost of sales, which needs to be broken down into cost of tangible goods sold and cost of services and are stated separately according to the FASB codification. ASC 225-10-S99-2 (2) states, "2. Costs and expenses applicable to sales and revenues. State separately the amount of (a) cost of tangible goods sold, (b) operating expenses of public utilities or others, (c) expenses applicable to rental income, (d) cost of services, and (e) expenses applicable to other revenues. Merchandising organizations, both wholesale and retail, may include occupancy and buying costs under caption 2(a). Amounts of costs and expenses incurred from transactions with related parties shall be disclosed as required under 210.4-08(k)." This says that both cost of goods sold and cost of services must be recognized as two different line items under the sales section of the income 14 statement. Additionally, we are told that depreciation is excluded from cost of sales. Under ASC225-10-S99-8, the company cannot report a subtotal that excludes depreciation. Therefore, Totz should not report a gross profit subtotal because the excluded depreciation is attributable to cost of sales. ASC 225-20- S99-8, or SAB Topic 11, states the following: "The following is the text of SAB Topic 11.B, Depreciation and Depletion Excluded from Cost of Sales. Facts: Company B excludes depreciation and depletion from cost of sales in its income statement. Question: How should this exclusion be disclosed? Interpretive Response: If cost of sales or operating expenses exclude charges for depreciation, depletion and amortization of property, plant and equipment, the description of the line item should read somewhat as follows: "Cost of goods sold (exclusive of items shown separately below)" or "Cost of goods sold (exclusive of depreciation shown separately below)." To avoid placing undue emphasis on "cash flow," depreciation, depletion and amortization should not be positioned in the income statement in a manner which results in reporting a figure for income before depreciation." 3. Gain on Sale of Corporate Headquarters Totz sold its corporate headquarters and relocated to Mountain View, California. The sale of the old building would be recognized as extraordinary under ASC 225-20-45-1; however, this codification is superseded by ASU 225- 20-65-1, which states that extraordinary items are no longer listed on the income statement. Under the combination of ASC-605-10-S99-1 and ASC-360-10-45-5, the gain on the sale of corporate headquarters should be recognized and presented 15 as operating income. ASC-605-10-S99-1 states that "Gains or losses from the sale of assets should be reported as 'other general expenses' ... Any material item should be stated separately." ASC-360-10-45-5 states that "A gain or loss recognized on the sale of the long-lived asset (disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes in the income statement of a business entity." Because of this, the sale of this building will be recognized as operating income. The gain on the sale of the building would be included in the operating income section of the income statement. This gain will be listed as a line item under the operating income section of the income statement, and will be be added to net income and be taxed accordingly. 4. Class Action Settlement Due to a class action lawsuit settlement against a supplier, Totz received proceeds of $2.7 million. Under ASC 225-20-45-1, this item would have been treated as an extraordinary item; it is both unusual and infrequent and would have been listed as an extraordinary gain or loss on the income statement. However, under ASU 225-20-65-1, extraordinary items are no longer listed on the income statement, which means that this item would no longer be considered extraordinary. the costs associated with the materials provided by the supplier in this transaction are part of Totz' central operations and therefore, the gain associated with the class action lawsuit should be treated as operating income. ASC-605-10-S99-1 indicates that both gains and losses should be treated according to the guidance of Reg S-X, Rule 5-03(b)(6).

1. Which of the subsequent is/are accompanying with _________the financial sector of India and controlled by________ the Replacement Row of India (RBI)_________?

2. What prepares price floorboards cruel___________?

3. Why is the unemployment rate low in India statistically?

1. Unemployment is calculated only from the age group of 15 years to 59 years.

2. Unemployment survives only when an individual cannot find a job.

3. People are not interested in working outside the domestic area.

Choose the correct option.

4. What does the bowed-out shape __________of the production possibilities__________ curve illustrate________?

5. What is the main monetary_________ problem confronted by__________ the the social order____________?

6. What prepares "Private enterprise" discuss to_________?

7. The goal of a uncontaminated marketplace economy__________ is to meet the desire of ______ .

8. What organizes the law of________ request______ mean______?

9. Which of the subsequent is an specimen of an agronomic price sustenance database?

10. . 4. Class Action Settlement Due to a class action lawsuit settlement against a supplier, Totz received proceeds of $2.7 million. Under ASC 225-20-45-1, this item