f12CorporationsIncomeandTaxesBusiness(公司金融会.pptx

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1、C12-1Learning ObjectivesPower Notes1.Corporate Income Taxes2.Unusual Income Statement Items3.Earnings Per Common Share4.Reporting Stockholders Equity5.Comprehensive Income6.Accounting for Investment in Stocks7.Business Combinations8.Financial Analysis and InterpretationChapter F12C12 Corporations:In

2、come and Taxes,Corporations:Income and Taxes,Stockholders Equity,Investments in Stocks Stockholders Equity,Investments in StocksC12-2 Corporate Income Taxes Unusual Income Statement Items Earnings Per Common Share Reporting Stockholders Equity Long-Term Stock Investments Business Combinations Price-

3、Earnings RatioSlide#Power Note Topics3101622283638 Note:To select a topic,type the slide#and press Enter.Power NotesChapter F12 Corporations:Income and Taxes,Corporations:Income and Taxes,Stockholders Equity,Investments in Stocks Stockholders Equity,Investments in StocksC12-3Corporate Income TaxesCo

4、rporate Income Taxes4Corporations are taxable entities that must pay income taxes.4Because income tax is often a significant amount,it is reported as a special deduction.4Taxable income is determined according to tax laws which are often different from income before income tax according to GAAP.4Dif

5、ferences in tax law and GAAP create some temporary differences that reverse in later years.4Temporary differences do not change or reduce the total amount of tax paid,they affect only the timing of when the taxes are paid.C12-4Temporary Differences in Reporting RevenuesTemporary Differences in Repor

6、ting Revenues Report NowReport NowTaxable LaterTaxable LaterReport LaterReport LaterTaxable NowTaxable NowExample:Income reporting methods.Point-of-Sale MethodInstallment MethodFinancialReportingTaxReportingExample:Cash collected in advance.WhenEarnedWhenCollectedRevenueReportingC12-5Temporary Diffe

7、rences in Reporting ExpensesTemporary Differences in Reporting Expenses Deduct NowDeduct NowDeduct LaterDeduct LaterDeduct SlowerDeduct SlowerDeduct FasterDeduct FasterExample:Product warranty expense.WhenEstimatedWhenPaidFinancialReportingTaxReportingExample:Methodsof depreciation.Straight-LineMeth

8、odMACRSMethodExpenseDeductionsC12-6 Date DateDescriptionDescriptionDebitDebitCreditCreditIncome Tax AccountingIncome Tax AccountingIncome Tax Expense120,000Income Tax Payable40,000Deferred Income Tax Payable80,000 Deferred Income Tax Payable 48,000 Income Tax Payable 48,0001st Yr.Income tax allocati

9、on due to timing differences.Financial reporting and tax reporting summary:Income before tax$300,000 x 40%rate=$120,000Taxable income$100,000 x 40%rate=$40,000Record$48,000 of deferred tax as payable.2nd Yr.C12-7 Date DateDescriptionDescriptionDebitDebitCreditCreditIncome Tax AccountingIncome Tax Ac

10、countingFinancial reporting and tax reporting summary:Income before tax$300,000 x 40%rate=$120,000Taxable income$100,000 x 40%rate=$40,000Income Tax Expense120,000Income Tax Payable40,000Deferred Income Tax Payable80,000The income tax expense is deducted from the income before tax reported on the in

11、come statement.1st Yr.C12-8 Date DateDescriptionDescriptionDebitDebitCreditCreditIncome Tax AccountingIncome Tax AccountingFinancial reporting and tax reporting summary:Income before tax$300,000 x 40%rate=$120,000Taxable income$100,000 x 40%rate=$40,000Income Tax Expense120,000Income Tax Payable40,0

12、00Deferred Income Tax Payable80,000The income tax payable is based on the taxable income and is a current liability due and payable.1st Yr.C12-9 Date DateDescriptionDescriptionDebitDebitCreditCreditIncome Tax AccountingIncome Tax AccountingFinancial reporting and tax reporting summary:Income before

13、tax$300,000 x 40%rate=$120,000Taxable income$100,000 x 40%rate=$40,000Income Tax Expense120,000Income Tax Payable40,000Deferred Income Tax Payable80,000The deferred income tax payable is a deferred liability due later as the timing differences reverse and the taxes become due.1st Yr.C12-10Unusual In

14、come Statement ItemsUnusual Income Statement ItemsThree types of unusual items are:1.Results of discontinued operations.2.Extraordinary items of gain or loss.3.A change from one generally accepted accounting principle to another.These items and the related tax effects are reported separately in the

15、income statement.C12-11Jones CorporationIncome StatementFor the Year Ended December 31,2003Net sales$9,600,000 Income from continuing operationsbefore income tax$1,310,000Income tax620,000Income from continuing operations$690,000Loss on discontinued operations(Note A)100,000Income before extraordina

16、ry items and cumulative effect of a change in accounting principle$590,000Extraordinary item:Gain on condemnation of land,net ofapplicable income tax of$65,000150,000Cumulative effect on prior years of changing todifferent depreciation method(Note B)92,000Net income$832,000C12-12Jones CorporationInc

17、ome StatementFor the Year Ended December 31,2003Net sales$9,600,000 Income from continuing operationsbefore income tax$1,310,000Income tax620,000Income from continuing operations$690,000Loss on discontinued operations(Note A)100,000Income before extraordinary items and cumulative effect of a change

18、in accounting principle$590,000Extraordinary item:Gain on condemnation of land,net ofapplicable income tax of$65,000150,000Cumulative effect on prior years of changing todifferent depreciation method(Note B)92,000Net income$832,000C12-13Jones CorporationIncome StatementFor the Year Ended December 31

19、,2003Net sales$9,600,000 Income from continuing operationsbefore income tax$1,310,000Income tax620,000Income from continuing operationsIncome from continuing operations$690,000$690,000Loss on discontinued operations(Note A)100,000Income before extraordinary items and cumulative effect of a change in

20、 accounting principle$590,000Extraordinary item:Gain on condemnation of land,net ofapplicable income tax of$65,000150,000Cumulative effect on prior years of changing todifferent depreciation method(Note B)92,000Net incomeNet income$832,000$832,000Differences created by unusual items:discontinued ope

21、rations,extraordinary items,and change in methods.C12-14Jones CorporationIncome StatementFor the Year Ended December 31,2003Net sales$9,600,000 Income from continuing operationsbefore income tax$1,310,000Income tax620,000Income from continuing operations$690,000Loss on discontinued operations(Note A

22、)100,000Income before extraordinary items and cumulative effect of a change in accounting principle$590,000Extraordinary item:Gain on condemnation of land,net ofapplicable income tax of$65,000150,000Cumulative effect on prior years of changing todifferent depreciation method(Note B)92,000Net income$

23、832,000C12-15Jones CorporationIncome StatementFor the Year Ended December 31,2003Net sales$9,600,000 Income from continuing operationsbefore income tax$1,310,000Income tax620,000Income from continuing operations$690,000Loss on discontinued operations(Note A)100,000Income before extraordinary items a

24、nd cumulative effect of a change in accounting principle$590,000Extraordinary item:Gain on condemnation of land,net ofapplicable income tax of$65,000150,000Cumulative effect on prior years of changing todifferent depreciation method(Note B)92,000Net income$832,000C12-16Reporting Earnings Per Common

25、ShareReporting Earnings Per Common Share1.Income from continuing operations.2.Income before extraordinary items and the cumulative effect of a change in accounting principle.3.Extraordinary items and the cumulative effect of a change in accounting principle.4.Net income.Earnings per share(EPS)is the

26、 net income per share of common stock outstanding.When unusual items exist,EPS should be reported for:C12-17Jones CorporationIncome StatementFor the Year Ended December 31,2003Income from continuing operations$690,000 Net income$832,000Earnings per common share:Earnings per common share:Income from

27、continuing operations$3.45Loss on discontinued operations.50Income before extraordinary item and cumulative effect of a change in accounting principle2.95Extraordinary item.75Cumulative effect on prior years of changing to a different depreciation method.46Net income$4.16C12-18Jones CorporationIncom

28、e StatementFor the Year Ended December 31,2003Income from continuing operations$690,000 Net income$832,000Earnings per common share:Earnings per common share:Income from continuing operations$3.45Loss on discontinued operations.50Income before extraordinary item and cumulative effect of a change in

29、accounting principle2.95Extraordinary item.75Cumulative effect on prior years of changing to a different depreciation method.46Net income$4.16C12-19Jones CorporationIncome StatementFor the Year Ended December 31,2003Income from continuing operations$690,000 Net income$832,000Earnings per common shar

30、e:Earnings per common share:Income from continuing operations$3.45Loss on discontinued operations.50Income before extraordinary item and cumulative effect of a change in accounting principle2.95Extraordinary item.75Cumulative effect on prior years of changing to a different depreciation method.46Net

31、 income$4.16C12-20Jones CorporationIncome StatementFor the Year Ended December 31,2003Income from continuing operations$690,000 Net income$832,000Earnings per common share:Earnings per common share:Income from continuing operations$3.45Loss on discontinued operations.50Income before extraordinary it

32、em and cumulative effect of a change in accounting principle2.95Extraordinary item.75Cumulative effect on prior years of changing to a different depreciation method.46Net income$4.16C12-21Jones CorporationIncome StatementFor the Year Ended December 31,2003Income from continuing operations$690,000 Ne

33、t income$832,000Earnings per common share:Earnings per common share:Income from continuing operations$3.45Loss on discontinued operations.50Income before extraordinary item and cumulative effect of a change in accounting principle2.95Extraordinary item.75Cumulative effect on prior years of changing

34、to a different depreciation method.46Net income$4.16C12-22Paid-in capitalPaid-in capital:Preferred$5 stock,cumulative,$50 par (2,000 shares authorized and issued)$100,000Excess of issue price over par10,000$110,000Common stock,$20 par (50,000 shares authorized,45,000 issued)$900,000Excess of issue p

35、rice over par132,0001,032,000From donated land60,000 Total paid-in capital$1,202,000Stockholders EquityStockholders EquityC12-23Stockholders EquityStockholders EquityPaid-in capitalPaid-in capital:Preferred$5 stock,cumulative,$50 par (2,000 shares authorized and issued)$100,000Excess of issue price

36、over par10,000$110,000Common stock,$20 par (50,000 shares authorized,45,000 issued)$900,000Excess of issue price over par132,0001,032,000From donated land60,000 Total paid-in capital$1,202,000 Contributed capitalContributed capital:Preferred 10%stock,cumulative,$50 par(2,000 shares authorized and is

37、sued)$100,000Common stock,$20 par(50,000 shares authorized,45,000 issued)$900,000Additional paid-in capital202,000 Total contributed capital$1,202,000Shareholders EquityShareholders EquityC12-24Stockholders EquityStockholders EquityShareholders EquityShareholders EquityContributed capitalContributed

38、 capital:Preferred 10%stock,cumulative,$50 par(2,000 shares authorized and issued)$100,000Common stock,$20 par(50,000 shares authorized,45,000 issued)$900,000Additional paid-in capital202,000 Total contributed capital$1,202,000Paid-in capitalPaid-in capital:Preferred$5 stock,cumulative,$50 par (2,00

39、0 shares authorized and issued)$100,000Excess of issue price over par10,000$110,000Common stock,$20 par (50,000 shares authorized,45,000 issued)$900,000Excess of issue price over par132,0001,032,000From donated land60,000 Total paid-in capital$1,202,000 C12-25Adang CorporationRetained Earnings State

40、mentFor the Year Ended June 30,2003Reporting Retained EarningsReporting Retained EarningsRetained earnings,July 1,2002$350,000Net income$280,000Less dividends declared75,000Increase in retained earnings205,000Retained earnings,June 30,2003$555,000C12-26Adang CorporationRetained Earnings StatementFor

41、 the Year Ended June 30,2003Reporting Retained EarningsReporting Retained EarningsRetained earnings,July 1,2002$350,000Net income$280,000Less dividends declared75,000Increase in retained earnings205,000Retained earnings,June 30,2003$555,000C12-27Adang CorporationRetained Earnings StatementFor the Ye

42、ar Ended June 30,2003Reporting Retained EarningsReporting Retained EarningsRetained earnings,July 1,2002$350,000Net income$280,000Less dividends declared75,000Increase in retained earnings205,000Retained earnings,June 30,2003$555,000C12-28Long-Term Stock InvestmentsLong-Term Stock InvestmentsEquityM

43、ethodCostMethodNot significantinfluenceSignificantinfluenceOwnership%Controlling Interest 100%100%20%20%0%0%50%50%C12-29Long-Term Stock InvestmentsLong-Term Stock InvestmentsEquityMethodCostMethodNot significantinfluenceSignificantinfluenceOwnership%Controlling Interest 100%100%20%20%0%0%50%50%With

44、less than 20%ownership the buyer does not usually have significant influence.The buyer uses the cost method to account for the investment.C12-30Long-Term Stock InvestmentsLong-Term Stock InvestmentsEquityMethodCostMethodNot significantinfluenceSignificantinfluenceOwnership%Controlling Interest 100%1

45、00%20%20%0%0%50%50%Ownership over 20%usually indicates significant influence.The buyer uses the equity method to account for the investment.C12-31Long-Term Stock InvestmentsLong-Term Stock InvestmentsEquityMethodCostMethodNot significantinfluenceSignificantinfluenceOwnership%Controlling Interest 100

46、%100%20%20%0%0%50%50%The corporation owning all or a majority of the voting stock is called the parent company.The controlled corporation is the subsidiary company.Consolidated financial statements are prepared which combinine the operating results of the two entities.C12-32Long-Term Stock Investmen

47、tsLong-Term Stock InvestmentsEquityMethodCostMethodNot significantinfluenceSignificantinfluenceOwnership%Controlling Interest 100%100%20%20%0%0%50%50%C12-33 Date DateDescriptionDescriptionDebitDebitCreditCreditCost MethodCost MethodInvestment in Stock5,940Cash5,940Cash200Dividend Revenue200Mar.1Purc

48、hased 100 shares of Compton Corp.stock at 59 plus brokerage fee of$40.Received$2 cash dividend from Compton Corp.Dec.31The cost method is used when the buyer does not have significant influence over the operating and financing activities of the investee.C12-34 Date DateDescriptionDescriptionDebitDeb

49、itCreditCreditEquity MethodEquity MethodInvestment in Brock Corp.Stock350,000Cash 350,000Investment in Brock Corp.Stock 42,000Income of Brock Corp.42,000Cash18,000 Investment in Brock Corp.Stock 18,000Jan.2Purchased 40%of Brock Corporation for$350,000.Brock Corporation reports net income of$105,000.

50、Dec.31Brock Corporation reports total dividends of$45,000.Dec.31C12-35 Date DateDescriptionDescriptionDebitDebitCreditCreditSale of Long-Term Stock InvestmentSale of Long-Term Stock InvestmentCash17,500Investment in Stock15,700Gain on Sale of Investments1,800Mar.1Sold stock of Drey Inc.for$17,500.St