Case study 2: Totz Income Statement Analysis Using FASB Codification 12 1. Net Sales ASC 225-10-S99-2 (1) in the codification indicates that net sales of tangible products (i.e. the clothing from the Totz stores) are stated separately from revenues that are earned from services (i.e. services from its in-store art studio Doodlez) but are both featured under the Sales section of the income statement. The specific regulation is as follows: "If income is derived from more than one of the subcaptions described under 210.5-03.1, each class which is not more than 10 percent of the sum of the items may be combined with another class. If these items are combined, related costs and expenses as described under 210.5-03.2 shall be combined in the same manner. 1. Net sales and gross revenues. State separately: (a) Net sales of tangible products (gross sales less discounts, returns and allowances), (b) operating revenues of public utilities or others; (c) income from rentals; (d) revenues from services; and (e) other revenues." Both sales from Totz and Doodlez are more than ten percent of the sum of the items, which means they must be separately stated on the income statement. My team and I discussed compiling a comparative income statement for the different years of information provided to us. This would be useful to be able to compare revenues from 2014, 2015, and 2016; however, Doodlez was only introduced in the third quarter of 2015. Therefore, to properly disclose the 13 dramatic change in Doodlez's revenue from 2015 to 2016 (an increase of $7.3 million), explanatory notes to the financial statements would be necessary. 2. Gross Profit Gross profit is its own line item on the income statement. However, it is not actually a "section" of the income statement, but it is an important part of the financial statement. According to the codification ASC 360-20-55-14, "gross profit is presented as a separate item of revenue on the income statement when it is recognized as earned." Gross profit is equal to net sales less cost of sales, which needs to be broken down into cost of tangible goods sold and cost of services and are stated separately according to the FASB codification. ASC 225-10-S99-2 (2) states, "2. Costs and expenses applicable to sales and revenues. State separately the amount of (a) cost of tangible goods sold, (b) operating expenses of public utilities or others, (c) expenses applicable to rental income, (d) cost of services, and (e) expenses applicable to other revenues. Merchandising organizations, both wholesale and retail, may include occupancy and buying costs under caption 2(a). Amounts of costs and expenses incurred from transactions with related parties shall be disclosed as required under 210.4-08(k)." This says that both cost of goods sold and cost of services must be recognized as two different line items under the sales section of the income 14 statement. Additionally, we are told that depreciation is excluded from cost of sales. Under ASC225-10-S99-8, the company cannot report a subtotal that excludes depreciation. Therefore, Totz should not report a gross profit subtotal because the excluded depreciation is attributable to cost of sales. ASC 225-20- S99-8, or SAB Topic 11, states the following: "The following is the text of SAB Topic 11.B, Depreciation and Depletion Excluded from Cost of Sales. Facts: Company B excludes depreciation and depletion from cost of sales in its income statement. Question: How should this exclusion be disclosed? Interpretive Response: If cost of sales or operating expenses exclude charges for depreciation, depletion and amortization of property, plant and equipment, the description of the line item should read somewhat as follows: "Cost of goods sold (exclusive of items shown separately below)" or "Cost of goods sold (exclusive of depreciation shown separately below)." To avoid placing undue emphasis on "cash flow," depreciation, depletion and amortization should not be positioned in the income statement in a manner which results in reporting a figure for income before depreciation." 3. Gain on Sale of Corporate Headquarters Totz sold its corporate headquarters and relocated to Mountain View, California. The sale of the old building would be recognized as extraordinary under ASC 225-20-45-1; however, this codification is superseded by ASU 225- 20-65-1, which states that extraordinary items are no longer listed on the income statement. Under the combination of ASC-605-10-S99-1 and ASC-360-10-45-5, the gain on the sale of corporate headquarters should be recognized and presented 15 as operating income. ASC-605-10-S99-1 states that "Gains or losses from the sale of assets should be reported as 'other general expenses' ... Any material item should be stated separately." ASC-360-10-45-5 states that "A gain or loss recognized on the sale of the long-lived asset (disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes in the income statement of a business entity." Because of this, the sale of this building will be recognized as operating income. The gain on the sale of the building would be included in the operating income section of the income statement. This gain will be listed as a line item under the operating income section of the income statement, and will be be added to net income and be taxed accordingly. 4. Class Action Settlement Due to a class action lawsuit settlement against a supplier, Totz received proceeds of $2.7 million. Under ASC 225-20-45-1, this item would have been treated as an extraordinary item; it is both unusual and infrequent and would have been listed as an extraordinary gain or loss on the income statement. However, under ASU 225-20-65-1, extraordinary items are no longer listed on the income statement, which means that this item would no longer be considered extraordinary. the costs associated with the materials provided by the supplier in this transaction are part of Totz' central operations and therefore, the gain associated with the class action lawsuit should be treated as operating income. ASC-605-10-S99-1 indicates that both gains and losses should be treated according to the guidance of Reg S-X, Rule 5-03(b)(6).

Question 90

What is the difference between pseudoseizures and pseudopseudoseizures?

Question 91

Does a delay in controlling seizures result in more frequent seizures and

a more resistant epileptic disorder? And, if so, does this apply to all

seizure types?

Question 92

What genetic tests are recommended for epilepsy and Huntington's

disease?

Question 93

Is it useful to take an electroencephalograph (EEG) after a patient's

first-ever seizure and, if so, when is the best time to do so? Would you

recommend taking an EEG after every seizure and before diagnosis?

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Question 94

How often can drop attacks with loss of consciousness be due to atonic

fits in the absence of any other type of fit?

Question 95

How often are atonic fits the cause of falls with loss of consciousness in a

patient not suffering from any other type of seizure?

Question 96

Can mild anaemia (haemoglobin 10.8 g/dL) in a young female cause

syncopal attacks that are preceded by a sense of falling, followed by a

loss of consciousness and drowsiness for up to 1 hour? Do these data

favour complex partial seizures rather than syncope?

Question 97

I am confused between simple and complex partial seizures. Does the

loss of consciousness define complex partial seizures in an otherwise

what seems to be 'simple partial' clinically?

Question 98

What is the definition of accepted rather than complete control of

seizures in both partial and generalized tonic clonic seizures?

Question 99

In an otherwise normal adolescent patient with no history of drug or

alcohol intake, is it recommended that anti-epileptic drugs be started

after the first generalized tonic-clonic fit?

Question 100

Does antiepileptic drugs decrease libido in the long term? If they do, what

treatment is recommended?

Question 101

I'd like to know the possibility of giving these drugs in epileptics:

vincamine (Oxicebral), cinnarizine, piribedil (Trivastal) and

pentoxyphylline (Trental). I'd like to know if they are contraindicated.

Question 102

If an epileptic patient, treated with oxcarbazepine, develops a rash,

should this drug be withdrawn or the dosage decreased and then

increased gradually again?

Question 103

Does a patient with refractory epilepsy benefit from acetazolamide?

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Question 104

What anti-epileptic drug is recommended for a child with epilepsy and

co-morbid attention deficit hyperactivity disorder (ADHD)? Can Ritalin

safely be used for treatment?

Question 105

What is the difference in efficacy and pharmacokinetics between sodium

valproate and valproic acid?

Question 106

Is it safe to give valproic acid to infants below 12 months of age?

Question 107

How many times must the liver transaminases (SGOT and SGPT) rise to

justify a discontinuation of valproic acid therapy in children? Which of

these enzymes is more sensitive and reliable in this situation?

Question 108

1. Does valproic acid block the photosensitivity phenomenon in reflex

epilepsy?

2. Can a patient with this photosensitivity be safely exposed to computer

games or other photic stimuli when receiving valproic acid treatment?

3. Does the photosensitivity phenomenon occur in partial seizures?

Question 109

1. Can an epileptic fit be induced in idiopathic and symptomatic focal

epilepsy syndromes by flickering lights?

2. Is valproate effective against the photosensitive phenomenon (seizure

induction by flickering light)?

Question 110

How much time should one give before a loading dose of phenytoin is

judged to be ineffective in controlling seizures and an alternative should

be instituted?

Question 111

What is the maintenance dose of phenytoin in seizures arising as a

complication of chronic renal failure?

Question 112

I know that the loading dose of phenytoin in status epilepticus is

20 mg/kg with an upper limit of 1000 mg but if the same situation arose

as a complication of chronic renal failure (on regular dialysis), should

this dose remain the same or be reduced? If reduced, what should the

dose be?

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Question 113

1. What is the most effective antiepileptic for a patient with simple

partial motor status epilepticus who is not responding to a loading

dose of phenytoin?

2. How long does phenytoin, given in a loading dose, take to work?

Question 114

Is valproate effective if given rectally in status epilepticus and, if so, what

dose is recommended?

Question 115

In simple partial motor status epilepticus, if the patient does not respond

to diazepam and phenytoin, is it justifiable to proceed to anaesthetic

medication?

Question 116

What is the recommended upper limit dose of lamotrigine when

combined with both carbamazepine and valproate?

Question 117

Is a valproate-lamotrigine combination more effective than

carbamazepine on its own against partial seizures?

Question 118

Why is the incidence of parkinsonism less common in smokers?

Question 119

Is it recommended to start the treatment of parkinsonism with dopamine

agonists alone in elderly (over 60 years old) patients, and to delay using

L-dopa until the disease has progressed much further? Is there a rationale

for this protocol in younger patients?

Question 120

Does amantadine increase the endogenous release of dopamine, thus

aiding early treatment of parkinsonism?