Question

Two accountants, Yuan Tsui and Sergio Aragon, are arguing about the merits of presenting an income statement in the multiple-step versus the single-step format, and presenting expenses in the nature or function of expense format. The discussion involves the following 2014 information for Singh Corp. (in thousands):
Common shares outstanding for 2014 total 30,550,000. The effective tax rate on all income is 30%.
Instructions
(a) Prepare an income statement for the year ended December 31, 2014, using the multiple-step format, showing expenses by function. Include calculation of EPS.
(b) Prepare an income statement for the year ended December 31, 2014, using the single-step format, showing expenses by nature. Include calculation of EPS.
(c) From the perspective of an investor who is interested in information about operating versus non-operating items and the various areas of the company's operations, which format and classification of expenses is preferred? Explain why.


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  • CreatedSeptember 18, 2015
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