Name: Ernie Jane G. Villanueva
Date: February 12,2022
Topic # 3: Others Topic “Statement of Comprehensive income”
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31,2022
Net Sales
Less: Cost of Good sold
GROSS PROFIT
Add: Other Income
Less: OPEX
PROFIT BEFORE TAX
Less: Tax expense
INCOME FROM CONTINUING
Add: Income from discontinued
NET INCOME
Add/less: Other comprehensive income
COMPREHENSIVE INCOME
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
XX
 HOW TO GET NET SALES???
Gross sales
Less: sales discount
Sales return
Sales allowance
NET SALES
XX
XX
XX
XX
XX
 HOW TO GET COST OF GOOD SOLD-MERCHANDISING???
Beginning Inventory
Add: Purchases
Purchase discount
Purchase return
Purchase allowances
Less: Ending Inventory
COST OF GOOD SOLD
XX
XX
XX
XX
XX
XX
XX
 HOW TO GET COST OF GOOD SOLD-MANUFACTURING???
Raw material, Beg.
Add:Net purchases
Less: Raw material, ends
RAW MATERIAL USED
XX
XX
XX
XX
Purchases
Add: Freight in
Less: P-discount
P-return
P-allowances
NET PURCHASES
XX
XX
XX
XX
XX
XX
Add: Direct labor
Overhead Cost
MANUFACTURING COST
Add: Work in process ,Beg.
TOTAL GOODS PUT IN PROCESS
Less: Work in process, end
COST OF GOODS MANUFACTRED
Add: Finished goods, beg.
TOTAL GOODS AVAIBLE FOR SALE
Less: Finished goods,end
COST OF GOOD SOLD
XX
XX
XX
Xx
XX
XX
XX
Xx
XX
XX
XX
 HOW TO GET GROSS PROFIT???
Sales
Less: Cost of good sold
GROSS PROFIT
XX
XX
XX
NORMAL COSTING
Direct labor
Times: Pre-determine OH rate
OVERHEAD APPLIED
ACTUAL COSTING
Indirect material
Indirect labor
Factory supervision
Factory taxes
Depre. Factory equip.
Depre. Factory Bldg.
Heat.light and power
Factory Insurance
Maintenance factory
Rent of factory Bldg.
Repair of factory equip.
 HOW TO GET OTHER INCOME???
Rent income
Interest income
Commission income
Gain on sale
Gain on retirement
Recovery from insurance
Investment income
Unrealized gain loss-PL
TOTAL OTHER INCOME
XX
XX
XX
XX
XX
XX
XX
XX
XX
 HOW TO GET OPERATING EXPENSE???
The OPEX has 5 natures namely:





Cost of Good sold
General and administrative
Selling expense
Finance cost
Other expenses
Cost of Good sold
-Determine the Direct labor, material and overhead {gagastusin mo inside the factory}
General and administrative
X
X
X
x
x
x
x
x
x
x
x
x
x
x
-Gagastusin mo to administer the company…If ang gagastusin mo ay nasa loob ng opisina ni
company kung saan sila nag memeeting , kung saan nag record, kung saan sila nag strategized, yan
yung general and administrative what are those?








Salaries of office staff
Salaries of officers (e.g..,vice president)
Depreciation of office equipment, building
Rent of office building
Office supplies
Audit fee, accounting fee, legal fees
Bad debts expense
Insurance expense
(kung ininsure mo factory…Overhead…
pag office…General and Administrative
pag store…Selling, but if the problem is silent used GAA)
Selling expense
-Ginagastos sa labas ng opisina,sa labas ng factory,ito yung ginagastos mo para makapag benta
ka sa loob ng store mo, what are those?






Salaries of store employees (sales dept.)
Depreciation of store equipment, building
Rent of store building
Freight out to customer
Advertising and marketing expense
Commission expense
Finance Cost
-Related sa interest, sa bonds,notes loans,,,etc…so what are those?
 Interest expense
 Discount lost
Other expenses
-the word “OTHERS” not CGS,GAA,SE,FC…it means not continues na ginagastos, bihira mo lng sya
na iincured lagi, so what are those?




Loss from casualties (e.g..,storm, flood)
Loss on sale of PPE
Loss on retirement of debt
Research and development
 HOW TO GET PROFIT BEFORE TAX???
Net Sales
Less: Cost of good sold
GROSS PROFIT
Add: Other income
Less: OPEX
PROFIT BEFORE TAX
XX
XX
XX
XX
XX
XX
 HOW TO GET TAX EXPENSE?
Profit before tax
Times: tax rate
TAX EXPENSE
XX
XX
XX
PROBLEMS:
Spades Company provided the ff. information for the year ended December 31,2022:
Sales
8,000,000
Net sales
Sales salaries
520,000
Selling expense
Advertising
120,000
Selling expense
Indirect labor
600,000
OH-CGS
Delivery expense
160,000
Selling expense
Freight in
80,000
DM-CGS
Depreciation-Machinery
50,000
OH-CGS
130,000
OH-CGS
Purchases
1,600,000
DM-CGS
Direct labor
1,480,000
DL-CGS
Factory supplies expense
120,000
OH-CGS
Office supplies expense
30,000
Gen. Admn
Office salaries
800,000
Gen. Admn
Factory superintendence
480,000
OH-CGS
Doubtful accounts
100,000
Gen. Admn
Factory taxes
Factory maintenance
150,000
OH-CGS
Factory heat, light and power
220,000
OH-CGS
Income tax expense
170,000
Tax expense
Inventory balances at the end of fiscal period as compared with balances at the beginning at the
fiscal period were as follows:
Finished goods
200,000 decrease
Goods in process
90,000 decrease
Raw materials
100,000 increase
SOLUTION:
NET SALES
Sales 8,000,000
COST OF GOOD SOLD
Raw material, Beg.
0
Add:Net purchases:
1,680,000
Freight in
Purchases
80,000
1,600,000
Less: Raw material, ends
RAW MATERIAL USED
1,580,000
Add: Direct labor
1,480,000
Overhead Cost
Indirect
Depreciation
Factory taxes
Factory supplies
Factory superin.
Factory maintenan.
Factory heat
100,000
3,230,000
600,000
50,000
130,000
120,000
480,000
150,000
220,000
MANUFACTURING COST
4,810,000
Add: Work in process ,Beg.
90,000
TOTAL GOODS PUT IN PROCESS
4,900,000
Less: Work in process, end
0
COST OF GOODS MANUFACTRED
4,900,000
Add: Finished goods, beg.
200,000
TOTAL GOODS AVAIBLE FOR SALE
Less: Finished goods,end
0
COST OF GOOD SOLD
5,100,000
OPEX
>GENERAL AND ADMINSTRATIVE
Office supplies expense
30,000
Office salaries
800,000
Doubtful accounts
100,000
TOTAL GEN ADM
930,000
>SELLING EXPENSE
Sales salaries
520,000
Advertising
120,000
Delivery expense
160,000
TOTAL SELLING EXPENSE
5,100,000
800,000
TOTAL OPEX (930,000 + 800,000) = 1,730,000
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31,2022
Net Sales
Less: Cost of Good sold
GROSS PROFIT
Add: Other Income
Less: OPEX
PROFIT BEFORE TAX
Less: Tax expense
INCOME FROM CONTINUING
Add: Income from discontinued
NET INCOME
Add/less: Other comprehensive income
COMPREHENSIVE INCOME
8,000,00
5,100,000
2,900,000
0
1,730,000
1,170,000
170,00
1,000,000
0
1,000,000
0
1,000,000
1.What amount of cost of good sold for the current period?
Ans: 5,100,000
2.What amount of General and Administrative expense for the current year?
Ans: 930,000
3.What is the amount of selling distribution expense for the current year?
Ans: 800,000
4.What amount of net profit for the current period?
Ans: 1,000,000
NATURE OF EXPENSES-SELLING EXPENSE
5. Brock Corporation reports OPEX in 2 categories: 1)selling, 2) GEN.AND ADM, .The adjusted trial
balance at December 31 included the ff. expense and loss accounts:
Acc. And legal fees
120,000
Advertising
150,000
Freight out
80,000
Interest
70,000
GEN. AD
Selling expense
Selling expense
Finance cost
Loss on sale of long term investment 30,000
Other expenses
Officer’s salaries
225,000
Gen. Adm
Rent for office space
220,000
Half of SE and GEN
Sales salaries and commission
140,000
Selling expense
One Half of the rented premises is occupied by the sales department.
What is the total selling expense of Brocks?
ANS: 480,000
NATURE OF EXPENSES-GENERAL AND ADMINISTRATIVE
6.The ff. cost were incurred by Griff Co. a manufacturer,during 2021;
Accounting and legal fees
25,000
Gen Adm
Freight in
175,000
CGS
Freight out
160,000
Selling expense
Officers salaries
150,000
Gen Adm
85,000
Gen Adm
Insurance
Sales salaries and commission
215,,000
Selling expense
What amount should be reported as general and administrative expense in 2021?
ANS: 260,000
 HOW TO GET INCOME FROM DISCOUNTED (make sure I net of tax na ito)
SALES OF BUSINESS SEGMENT
Loss on sale of business segment
Impairment loss of business segment
Operating loss of business segment
Relocation of cost emloyees
INCOME FROM DISCONTINUED,GROSS
Tax expense ,benefit(100% less{if anong rate}
INCOME FROM DISCONTINUED ,NET
January 1 to decided to sell
Decided to sell to sold
Sold the business segment
PROBLEM
Revenue and expense
Revenue and expense
Impairment
Loss on sale
Relocation cost
XX
XX
XX
XX
XX
X%
XX
Included to discontinued operation
Included to discontinued operation
Included to discontinued operation
DISCONTINUED OPERATION-DISCONTINUED AT THE BEGINNING
7. Trunks company decided to discontinue its electronics division a separately identifiable component
of business. On December 31,2023 the division has not been completely sold. However negotiations
for the final and complete sales are progressing in a year . Analysis of the records for the year
disclosed the ff. relative to the electronics division:
Operating loss for the year
8,000,000
Loss of disposable of some electronics division asset during 2023
500,000
Expecting operating loss in 2024 preceding final disposal
1,000,000
Expected gain in 2024 in disposal of division
2,000,000
What amount should be reported as pretax loss from discontinued operation in 2023?
ANS: 8,500,000
Loss on sale of business segment
Impairment loss of business segment
Operating loss of business segment
Relocation of cost emloyees
INCOME FROM DISCONTINUED,GROSS
Tax expense ,benefit(100% less{if anong rate}
INCOME FROM DISCONTINUED ,NET
500,000
0
8,000,000
0
8,500,000
100%
8,500,000
DISCONTINUED OPERATION-DISCONTINUED DURING THE YEAR
8. On May 1,2022 Topak Company approved a plan to disclosed of a business segment .It is expected
that the sale will occur on March 1,2023. On December 31,2022 the carrying amount of net asset of
the segment was 2,000,000 and the fair value of 1,800,000. During 2022, the company paid employee
severance and relocation cost of 100,000 as a direct result of discontinued operation. Income tax reate
is 30% . The revenues and expenses of the discontinued segment during 2022 were:
Revenue
January 1 to April 30
May 1 to December 31
Expense
1,500,000
2,000,000
700,000
900,000
How much should be reported in discontinued operation for the year 2022?
Ans: 700,000
January 1 to decided to sell
Revenue and expense
1,500,000- 2,000,000
Included to discontinued operation
=500,000 (loss)
Decided to sell to sold
Revenue and expense
Included to discontinued operation
700,000-900,000
=200,000(loss)
Sold the business segment
Impairment
Asset 2,000,000
Fv 1,800,000
= 200,000
Loss on sale
0
Relocation cost
100,000
Included to discontinued operation
Loss on sale of business segment
Impairment loss of business segment
Operating loss of business segment
Relocation of cost emloyees
INCOME FROM DISCONTINUED,GROSS
Tax expense ,benefit(100% less{if anong rate}
INCOME FROM DISCONTINUED ,NET
0
200,000
700,000
100,000
1,000,000
70%
700,000
 HOW TO GET OTHER COMPREHENSIVE INCOME(make sure of net of tax)
OCI TO BE RECYCLED
Unrealized -Debt@ FVOCI
Unrealized -FS translation
Unrealized – Cashflow hedge
XX
XX
XX
OCI NOT TO BE RECYCLED
Unrealized - Equity @ FVOCI
Remeasurement gains and loss
Revaluation surplus
Financial liab, due to credit risk
XX
XX
XX
XX
PROBLEM:
Sham God Company provided the ff. information for the current year:
Income from continuing operation
4,000,000
Income from discontinued operation
500,000
Unrealized gain on financial asset- FVPL
800,000
Unrealized on loss equity investment-FVOCI
1,000,000
Investment gain on debit investment-FVOCI
1,200,000
Unrealized gain on future contract designated a cashflow hedge
400,000
Translation loss on foreign operation
200,000
Net “remeasurement “ gain on defined benefit plan during the year
600,000
Loss on credit risk if financial liability at FVPL
300,000
Revaluation surplus
2,500,000
9. What net amount should be reported as other comprehensive income for the current year?
Ans: 3,200,000
Investment gain on debit investment-FVOCI
1,200,000
Unrealized gain on future contract designated a cashflow hedge
400,000
Net “remeasurement “ gain on defined benefit plan during the year
600,000
Revaluation surplus
2,500,000
TOTAL
Less:
4,700,000
Unrealized on loss equity investment-FVOCI
1,000,000
Translation loss on foreign operation
200,000
Loss on credit risk if financial liability at FVPL
300,000
TOTAL
3,200,000
10. What amount should reported as comprehensive income for the current year?
Ans: 7,700,000
Net Sales
Less: Cost of Good sold
GROSS PROFIT
Add: Other Income
Less: OPEX
PROFIT BEFORE TAX
0
0
0
0
0
0
Less: Tax expense
INCOME FROM CONTINUING
Add: Income from discontinued
NET INCOME
Add: Other comprehensive income
COMPREHENSIVE INCOME
0
4,00,000
500,000
4,500,000
3,200,000
7,700,000
OCI RECYCLE TO PROFIT OR LOSS VS. OCI DIRECT TO RETAINED EARNINGS
Sher Company reported the ff. in the statement of comprehensive income for 2020:
Unrealized gain on trading securities
1,750,000
Unrealized loss on future contract designated as cash flow hedge
Revaluation surplus in 2020
Acturial gain on project benefit obligation
Exchange differences in translating foreign ope.-credit
560,000
2,500,000
1,680,000
750,000
Unrealized gain on equity investment at FVOCI
1,000,000
Unrealized gain on debt investment at FVOCI
1,500,000
11. What net amount may be subsequently recognized in profit or loss? {TIP: RECYCLE}
Ans: 1,690,000
Unrealized gain on debt investment at FVOCI
1,500,000
Exchange differences in translating foreign ope.-credit
750,000
TOTAL
2,250,000
Less: Unrealized loss on future contract designated as cash flow hedge
560,000
TOTAL
1,690,000
12. What net amount will not subsequently recognized in profit or loss? {Tip: Not recycle}
ANS:
Revaluation surplus in 2020
Acturial gain on project benefit obligation
Unrealized gain on equity investment at FVOCI
2,500,000
1,680,000
1,000,000
TOTAL
5,180,000
COMPREHENSIVE INCOME
Blame company provided the ff. information for the current year:
Net income
Unrealized loss on FVOTCI investments
Translation reserve-credit
Revaluation reserve
6,000,000
500,000
600,000
2,000,000
Accumulated profits adjustment-debit
100,000
Appropriated reserve
200,000
Gain on sale of treasury shares
150,000
13.What amount of comprehensive income should reported for the current year?
Ans:8,100,000
Net Sales
Less: Cost of Good sold
GROSS PROFIT
Add: Other Income
Less: OPEX
PROFIT BEFORE TAX
Less: Tax expense
INCOME FROM CONTINUING
Add: Income from discontinued
NET INCOME
Add: Other comprehensive income
COMPREHENSIVE INCOME
0
0
0
0
0
0
0
0
0
6,000,000
2,100,000
8,100,000
Unrealized loss on FVOTCI investments
500,000
Translation reserve-credit
600,000
Revaluation reserve
Total
2,000,000
2,100,000