The income statement for a British company, Avon Rubber plc, is presented as follows. Avon prepares its financial statements in accordance with IFRS.

Instructions

a. Review the Avon Rubber income statement and identify at least three differences between the IFRS income statement and an income statement of a U.S. company as presented in the chapter.

b. Identify any irregular items reported by Avon Rubber. Is the reporting of these irregular items in Avon?s income statement similar to reporting of these items in U.S. companies? income statements? Explain.

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Avon Rubber plc Consolidated Income Statement (pounds in thousands) Current Year Prior Year Continuing operations 107,600 (77,892) Revenue 117,574 Cost of sales (89,256) Gross profit 29,708 28,318 Distribution costs (4,832) (13,740) (4,527) (14,536) Administrative expenses Other operating income Operating profit/(loss) from continuing operations Operating profit/(loss) is analysed as: Before depreciation, amortization and exceptional 9,255 11,136 items 15,723 13,577 Depreciation and amortization (4,587) (4,322) Operating profit/(loss) before exceptional items Exceptional operating items 11,136 9,255 Finance income 16 (985) (1,152) Finance costs (486) (443) Other finance income Profit/(loss) before taxation 10,212 7,134 Taxation (3,094) (2,808) Profit/(loss) for the year from continuing operations 7,118 4,326 Earnings/(loss) per share Basic 25.2p 23.3p 15.2p 14.4p Diluted Earnings/(loss) per share from continuing operations 25.2p Basic 15.2p 14.4p Diluted 23.3p