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The statement of income is referred to by various names, such as the income statement, statement of operations, statement of earnings, or others. Whatever name is used, its purpose is the same: to provide users of the financial statements with a measurement of a reporting entity’s results of operations over a period of time. This allows users to make important investing, lending, and other decisions by understanding trends of key measures such as sales and profitability. The income statement contrasts with the balance sheet, which provides a measure of financial position at a point in time. It also contrasts with the statement of comprehensive income, which shows the change in a reporting entity’s equity from all sources (net income, as well as revenues, expenses, gains, and losses included in comprehensive income but excluded from net income).
Various accounting standards include guidance on the income statement presentation and related disclosure of certain transactions. Other chapters of this guide discuss specific topics. This chapter covers requirements that are more general in nature, or that are not covered by other chapters. The following list includes some of the authoritative guidance that is more pervasive for purposes of income statement presentation.
Presentation
  • ASC 205, Presentation of Financial Statements
  • ASC 225, Income Statement
  • ASC 235, Notes to Financial Statements
Revenues
  • ASC 606, Revenue from contracts with customers
  • ASC 610-20, Gains and losses from the derecognition of nonfinancial assets
Expenses
SEC
New guidance
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832). The new guidance requires business entities that account for transactions with a government by applying a grant or contribution model by analogy to disclose information about government assistance recorded during the period. ASU 2021-10 is effective for all entities for annual reporting periods beginning after December 15, 2021. Refer to FSP 3.10.3 for details.
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