Section 1: 30–40%1A2
Income Statement / Statement of Profit or Loss
Exam Insight
The income statement questions AICPA loves most: discontinued operations and comprehensive income. The trap is that candidates forget the 'strategic shift' requirement - not every disposal qualifies as discontinued ops. Also watch out for OCI items: unrealized gains on AFS securities and pension adjustments go through OCI, not net income. Confusing those two will cost you points.
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What AICPA Wants You to Know
- 1Distinguish between single-step and multi-step income statement formats
- 2Calculate and present gross profit, operating income, and income from continuing operations
- 3Apply the discontinued operations rules: what qualifies, where it's reported, and how it's measured
- 4Know that extraordinary items no longer exist under US GAAP (eliminated by ASU 2015-01)
- 5Describe earnings per share (EPS) requirements and where EPS appears on the face of the I/S
- 6Identify which unusual or infrequent items are reported within continuing operations