1. Copyright  2006 Pearson Education Canada Inc. 10-1

2. Copyright  2006 Pearson Education Canada Inc. 10-2 Outline  Statement of Income  Single Step Format  Multiple Step Format  The Uniform System of Accounts for the Lodging Industry (USAL) 9 th Revised Edition  Special Income Statement Items  Comprehensive Income  Illustrative Income Statement

3. Copyright  2006 Pearson Education Canada Inc. 10-3 STATEMENT OF INCOME  Reflects results of operations of a company for a period of time  It might include special items such as gain or loss on sale of property or extraordinary items

4. Copyright  2006 Pearson Education Canada Inc. 10-4 SINGLE STEP FORMAT Arrives at net income in one step

5. Copyright  2006 Pearson Education Canada Inc. 10-5 MULTIPLE STEP FORMAT  Arrives at net income in many steps  Provides additional information for managerial purposes  USAL is an example of a multiple step income statement

6. Copyright  2006 Pearson Education Canada Inc. 10-6 The Uniform System of Accounts for the Lodging Industry (USAL) OPERATED DEPARTMENTS UNDISTRIBUTED OPERATING EXPENSES FIXED CHARGES

7. Copyright  2006 Pearson Education Canada Inc. 10-7 OPERATED DEPTS Revenue and expenses allocated to revenue producing departments USAL-9TH REVISED EDITION

8. Copyright  2006 Pearson Education Canada Inc. 10-8 USAL-9TH REVISED EDITION UNDISTRIBUTED OPERATING EXPENSES INCURRED FOR THE BENEFIT OF THE OPERATION

9. Copyright  2006 Pearson Education Canada Inc. 10-9 USAL-9TH REVISED EDITION NOT UNDER THE CONTROL OF OPER MGT RENT, INT DEP PROP TAX

10. Copyright  2006 Pearson Education Canada Inc. 10-10 Special Income Statement Items Extraordinary Items Gains and losses of an unusual and nonrecurring nature Discontinued Operations Gains and losses from the disposal of a business Cumulative effect of a change in accounting principle The effect of the change is reported in a separate section of the income statement and disclosed in footnotes

11. Copyright  2006 Pearson Education Canada Inc. 10-11 Comprehensive Income Change in equity from transactions and other events resulting from non-owner sources One Statement Approach The Two-Statement Approach The Statement of Changes in Equity Approach

12. Copyright  2006 Pearson Education Canada Inc. 10-12 Illustrative Income Statement Revenue 2007 2006 2005 Rooms $1,700 $1,500 $1,400 Food and Beverage 980 800 700 Other 400 450 430 $2,080 $2,750 $2,530 Expenses Rooms $500 $480 $460 Food and Beverage 700 650 600 Other Expenses 500 700 650 1,700 1,830 1,710 Income before Income Taxes and Extraordinary item 380 920 820 100 280 250 Provision for Income Taxes 100 280 250 Income before Extraordinary Item 280 640 570 Extraordinary Loss (20) Net Income $260 $640 $570