Reading 28

Financial Statement Analysis · Analyzing Income Statements

MODULE 28.1: REVENUE RECOGNITION

LOS 28.a

Describe general principles of revenue recognition, specific revenue recognition applications, and implications of revenue recognition choices for financial analysis.

As a general rule, revenue is recognized in the period in which it is earned, which may not necessarily be the same as the period in which cash is collected. Revenue is reported net of returns and allowances.

Converged IFRS/U.S. GAAP standards take a principles-based approach: a firm should recognize revenue when it has transferred a good or service to a customer. The standards identify a five-step process:

Step 1:Identify the contract(s) with a customer.
Step 2:Identify the separate or distinct performance obligations in the contract.
Step 3:Determine the transaction price.
Step 4:Allocate the transaction price to the performance obligations in the contract.
Step 5:Recognize revenue when (or as) the entity satisfies a performance obligation.

Key definitions:

A performance obligation is a promise to deliver a distinct good or service.
A transaction price is the amount a firm expects to receive from a customer. It can be variable (e.g., bonuses for early delivery).
A firm recognizes revenue when it transfers control of the good or service to the buyer. Indicators of control transfer include: physical possession, acceptance, transfer of risk/benefits, legal title, and the seller having a right of payment.
For long-term contracts, revenue is recognized based on a firm's progress toward completing a performance obligation (input method: % of costs incurred; output method: engineering milestones or % of total output delivered).
Costs to secure a long-term contract (e.g., sales commissions) must be capitalized and expensed over the life of the contract.

中文翻譯

一般原則：收入應於「賺得」的期間認列，不一定等同收到現金的時期。收入以扣除退貨及折讓後的淨額列報。

IFRS與U.S. GAAP的收斂準則採原則導向：企業在向客戶轉移商品或服務時認列收入，分五步驟：

識別與客戶的合約
識別合約中各個獨立的履約義務
決定交易價格
將交易價格分配至各履約義務
於滿足（或隨著滿足）履約義務時認列收入

關鍵定義：

履約義務：承諾交付某一獨立商品或服務。
交易價格：企業預期從客戶收取的金額，可能為浮動金額（如提前完工獎金）。
企業在將商品或服務的控制權轉移給買方時認列收入（指標：實物占有、驗收、風險利益轉移、法律所有權、取得付款權利）。
長期合約：依完工進度認列收入（投入法：成本比例；產出法：工程里程碑或產出比例）。
取得長期合約的成本（如銷售佣金）須資本化並於合約期間攤銷。

Example: Revenue Recognition — Long-Term Contract

A contractor agrees to build a warehouse for $10 million, estimating total costs at $8 million.

Year 1: $4 million costs incurred = 50% of estimated total costs → revenue recognized = 50% × $10M = $5 million.

Year 2: Additional $2 million costs. Cumulative costs = $6M / $8M = 75%. Cumulative revenue to date = 75% × $10M = $7.5M. Year 2 revenue = $7.5M − $5M = $2.5 million.

中文翻譯

承包商簽訂$1,000萬建倉合約，估計總成本$800萬。

第1年發生成本$400萬 = 50%完工 → 認列收入 = 50% × $1,000萬 = $500萬。

第2年再發生$200萬。累計成本$600萬 ÷ $800萬 = 75%。累計應認列收入 = $750萬，扣除第1年已認列$500萬，第2年認列 = $250萬。

Example: Principal vs. Agent

A travel agent arranges a $10,000 first-class ticket and receives a $1,000 commission. Because the agent bears no inventory or credit risk, they act as an agent → recognize only the commission of $1,000 as revenue (not the gross $10,000).

Note: gross profit is the same ($1,000) whether treated as principal or agent, but gross profit margin differs dramatically (10% as principal vs. 100% as agent).

中文翻譯

旅行社安排$10,000機票並收取$1,000佣金。因旅行社不承擔庫存或信用風險，其身份為代理人，僅能認列佣金$1,000為收入（而非票款全額$10,000）。

注意：無論以委託人還是代理人身份報告，毛利金額相同（均為$1,000），但毛利率差異懸殊（委託人：10%；代理人：100%）。分析師在跨公司比較時需留意此差異。

MODULE 28.2: EXPENSE RECOGNITION

LOS 28.b

Describe general principles of expense recognition, specific expense recognition applications, implications of expense recognition choices for financial analysis, and contrast costs that are capitalized versus those that are expensed.

Under accrual accounting, expense recognition is in the period in which the economic benefits are consumed. Three methods:

Matching principle: expenses to generate revenue are recognized in the same period as the revenue (e.g., COGS recognized when inventory is sold).
Expensing as incurred: period costs (e.g., administrative overhead) are expensed in the period they are incurred.
Capitalization: costs initially recorded as assets and expensed over the asset's life via depreciation/amortization.

An accounting policy that recognizes expenses later is aggressive; one that recognizes expenses earlier is conservative. Expensing is more conservative than capitalization.

Capitalization vs. Expensing — Key Impacts:

Figure 28.1: Financial Statement Effects of Capitalizing vs. Expensing

Item	Capitalizing	Expensing
Assets & equity	Higher	Lower
Net income (first year)	Higher	Lower
Net income (other years)	Lower	Higher
Income variability	Lower	Higher
ROA & ROE (first year)	Higher	Lower
ROA & ROE (other years)	Lower	Higher
Debt ratio & debt-to-equity	Lower	Higher
CFO	Higher	Lower
CFI	Lower	Higher

教授提醒

Capitalized interest increases CFI (outflow) and CFO (higher). Once an asset is in service, depreciation of capitalized interest flows through the income statement. When computing interest coverage ratios, analysts should use both capitalized and expensed interest for a clearer picture of solvency.

中文翻譯

在應計制下，費用應於消耗經濟利益的期間認列。三種方式：

配合原則：產生收入的費用與收入同期認列（如存貨出售時認列銷貨成本）。
即期費用化：期間成本（如行政管理費用）於發生時即認列。
資本化：成本先記為資產，再按折舊/攤銷分期費用化。

晚認列費用的政策較激進（aggressive）；早認列較保守（conservative）。費用化比資本化更保守。

資本化vs.費用化的財務報表影響（圖28.1）：

資本化在第一年使資產、股東權益、淨利、ROA、ROE較高；後續年度較低。
資本化使收益波動性較低、負債比率較低。
資本化使CFO較高、CFI較低（因為資本支出計入CFI）。

教授注意：計算利息保障倍數時，分析師應將已資本化的利息也納入計算（加回折舊、加入分母），以更真實反映償債能力。

Capitalized Interest: Interest that accrues during the construction of an asset for own use is capitalized. It is reported in the cash flow statement as an outflow from investing activities (vs. normal interest paid, which is CFO under U.S. GAAP or CFO/CFF under IFRS).

Example: Interest Coverage — Capitalized Interest

Willock AG: EBIT = €160M, interest expense = €80M, capitalized interest = €20M, depreciation from previously capitalized interest = €10M.

\[ \text{Interest coverage} = \frac{\text{EBIT}}{\text{Interest expense}} \] \[ \text{Before adjustment} = \frac{\text{€}160\text{M}}{\text{€}80\text{M}} = 2.0 \] \[ \text{After adjustment} = \frac{\text{€}160\text{M} + \text{€}10\text{M}}{\text{€}80\text{M} + \text{€}20\text{M}} = \frac{\text{€}170\text{M}}{\text{€}100\text{M}} = 1.7 \]

Depreciation of previously capitalized interest reverses (added back to EBIT); capitalized interest in current period added to denominator.

Research and Development Costs:

IFRS: Research costs → expensed. Development costs → may be capitalized (if technically feasible, resources exist, market exists, intention to complete).
U.S. GAAP: Both R&D costs → generally expensed. Exception: costs to develop software for sale are capitalized after technological feasibility is established.

Bad Debt & Warranty Expense: The matching principle requires these to be estimated and recognized in the period of the sale, not the later period when costs are actually incurred.

中文翻譯

資本化利息：自建資產施工期間產生的利息費用可資本化，在現金流量表中列為投資活動流出（而非一般利息支付的CFO）。

利息保障倍數調整示例（Willock AG）：未調整前 = 2.0；調整後（加回前期資本化利息折舊至分子、加入當期資本化利息至分母）= 1.7。調整後數值更真實反映公司的負債償還能力。

研究與開發成本（R&D）：

IFRS：研究階段 → 費用化；發展階段符合條件（技術可行、資源充足、市場存在、有完成意圖）→ 可資本化。
U.S. GAAP：研究與開發成本通常全額費用化。例外：已建立技術可行性後，為出售而開發的軟體成本可資本化。

呆帳與保固費用：依配合原則，應於銷售發生的期間（而非實際發生損失時）估計並認列，不得延至實際發生時。

📝 Module Quiz 28.2

1. If a company purchases an asset with future economic benefits that are highly uncertain, the company should:

A. expense the purchase.
B. use straight-line depreciation.
C. use an accelerated depreciation method.

A — If future economic benefits are highly uncertain, the expenditure should be expensed in the period incurred. (LOS 28.b)

2. Red Company immediately expenses its development costs, while Black Company capitalizes. All else equal, Red Company will:

A. show smoother reported earnings than Black Company.
B. report higher operating cash flow than Black Company.
C. report higher asset turnover than Black Company.

C — A firm that expenses has lower assets → higher asset turnover (revenue / average assets). (LOS 28.b)

MODULE 28.3: NONRECURRING ITEMS

LOS 28.c

Describe the financial reporting treatment and analysis of non-recurring items (including discontinued operations, unusual or infrequent items) and changes in accounting policies.

Unusual or infrequent items are either unusual in nature or infrequent in occurrence and are material. Examples: gains/losses from sale of assets (if not ordinary operations), impairments, write-offs, write-downs, restructuring costs. These are included in income from continuing operations and reported before tax.

A discontinued operation is a component that management has decided to dispose of, which is physically and operationally distinct from the rest of the firm. Income/loss from discontinued operations is reported:

Separately in the income statement
Net of tax
After income from continuing operations
Past income statements must be restated to separate discontinued results
Any expected gain on disposal cannot be reported until after the sale is completed

Changes in Accounting Policies and Estimates:

Change in accounting policy (e.g., inventory costing method) → retrospective application; all prior-period statements presented are restated.
Change in accounting estimate (e.g., revised useful life of asset) → prospective application; no restatement of prior periods.
Correction of accounting error → retrospective application; prior-period results restated. Reported as a prior-period adjustment.

教授提醒

Changes in scope (M&A) and exchange rates can significantly affect comparability of financial statements. These are addressed in the Level II CFA curriculum.

中文翻譯

非常規項目（不尋常或非經常性、且金額重大）：如資產出售損益、減損、打銷、重組成本等。列入持續經營損益，稅前列報。

停業部門（已決定處分、且實物與營運上與其他業務明顯區分）：

在損益表中單獨列示
稅後列報
列於持續經營損益之後
過去的損益表需重編以分離停業部門損益
預期處分利得須等完成出售後才能認列

會計政策與估計的變更：

會計政策變更（如存貨成本法）→ 追溯重編，重編所有列報的前期報表。
會計估計變更（如資產耐用年限調整）→ 向前適用，不重編前期。
更正會計錯誤 → 追溯重編，作為前期調整列報。

📝 Module Quiz 28.3

1. Changing an accounting estimate:

A. is reported prospectively.
B. requires restatement of all prior-period statements presented.
C. is reported by adjusting the beginning balance of retained earnings for the cumulative effect.

A — A change in an accounting estimate is reported prospectively. No restatement of prior periods. (LOS 28.c)

2. Which of the following would most likely be reported below income from continuing operations, net of tax?

A. Gain or loss from the sale of equipment used in a firm's manufacturing operation.
B. A change from accelerated depreciation to straight-line.
C. The operating income of a physically and operationally distinct division that is currently for sale, but not yet sold.

C — A physically and operationally distinct division for sale is a discontinued operation — reported net of tax, below continuing operations. (LOS 28.c)

3. Which of the following statements about nonrecurring items is least accurate?

A. Discontinued operations are reported net of taxes, at the bottom of the income statement before net income.
B. Unusual or infrequent items are reported before taxes, above net income from continuing operations.
C. A change in accounting principle is reported in the income statement net of taxes, before net income.

C — A change in accounting principle requires retrospective restatement of prior-period financial statements; it is not simply reported in the income statement. (LOS 28.c)

MODULE 28.4: EARNINGS PER SHARE

LOS 28.d

Describe how earnings per share is calculated and calculate and interpret a company's basic and diluted earnings per share for companies with simple and complex capital structures including those with antidilutive securities.

EPS is reported only for common stock. A simple capital structure contains no potentially dilutive securities (only common stock, nonconvertible debt, and nonconvertible preferred stock) → reports only basic EPS. A complex capital structure contains potentially dilutive securities → must report both basic and diluted EPS.

Basic EPS

\[ \text{Basic EPS} = \frac{\text{Net income} - \text{Preferred dividends}}{\text{Weighted average number of common shares outstanding}} \]

Key rules for weighted average shares outstanding:

Shares issued enter computation from the date of issuance; reacquired shares excluded from the date of reacquisition.
Stock splits and stock dividends are applied retroactively to all shares before the split/dividend date (including beginning-of-period shares). Shares issued or repurchased after the split are not adjusted.

中文翻譯

EPS僅針對普通股計算。簡單資本結構（僅含普通股、不可轉換負債、不可轉換優先股）→ 只需揭露基本EPS；複雜資本結構（含潛在稀釋性證券）→ 須同時揭露基本與稀釋EPS。

基本EPS公式：（淨利 − 特別股股利）÷ 普通股加權平均流通股數

加權平均股數計算規則：

發行新股：從發行日起算；庫藏股：從收回日起排除。
股票分割與股票股利須追溯調整，適用於分割/發放日前的所有股數（包括期初股數）。分割後才發行或收回的股數不調整。

Example: Basic EPS

Johnson Co.: 10,000 shares Jan 1 → 4,000 new shares Apr 1 → 10% stock dividend Jul 1 → repurchase 3,000 shares Sep 1.

Answer

Jan 1 shares (before div): 10,000 × 1.10 × 12/12 = 11,000

Apr 1 issuance (before div): 4,000 × 1.10 × 9/12 = 3,300

Sep 1 repurchase (after div): −3,000 × 4/12 = −1,000

Weighted average = 13,300 shares

If net income = $10,000 and preferred dividends = $1,000: Basic EPS = ($10,000 − $1,000) / 13,300 = $0.68

中文翻譯

Johnson Co.計算加權平均股數：

1月1日期初10,000股 × 追溯調整1.10（7月股票股利）× 12/12 = 11,000
4月1日發行4,000股 × 1.10 × 9/12 = 3,300
9月1日收回3,000股（在股票股利之後，不調整）× 4/12 = −1,000
加權平均股數 = 13,300股

若淨利=$10,000、特別股股利=$1,000：基本EPS = $9,000 ÷ 13,300 = $0.68

Diluted EPS

Dilutive securities are options, warrants, convertible debt, or convertible preferred stock that would decrease EPS if exercised or converted. Antidilutive securities would increase EPS → excluded from diluted EPS calculation.

\[ \text{Diluted EPS} = \frac{\text{Net income} - \text{Pref. div.} + \text{Conv. pref. div.} + \text{Conv. debt interest}(1-t)}{\text{Wtd. avg. shares} + \text{Shares from conv. pfd.} + \text{Shares from conv. debt} + \text{Shares from options}} \]

Numerator adjustments (if dilutive):

Convertible preferred stock: add back convertible preferred dividends previously subtracted
Convertible bonds: add back after-tax interest expense: interest × (1 − tax rate)

Denominator adjustments:

Convertible preferred / bonds: add shares that would be created if converted at the start of the period
Stock options/warrants — Treasury Stock Method: assumes proceeds from exercise are used to repurchase shares at the average market price. Net increase in shares:

\[ \text{Net new shares} = \left[\frac{\text{AMP} - \text{EP}}{\text{AMP}}\right] \times N \]

where AMP = average market price; EP = exercise price; N = number of shares options can be converted into

Stock options/warrants are dilutive only when EP < AMP (exercise price below average market price).

中文翻譯

稀釋性證券：若行使或轉換後會降低EPS的選擇權、認股權證、可轉換債、可轉換優先股。反稀釋性證券：會提高EPS → 排除在稀釋EPS計算外。

稀釋EPS調整：

分子調整（若為稀釋性）：可轉換優先股 → 加回原扣除的特別股股利；可轉換債 → 加回稅後利息費用（利息 × (1 − 稅率)）。
分母調整：可轉換優先股/債 → 加入假設於期初轉換所產生的股數；選擇權/認股權證 → 採庫藏股法（假設行使所得款項以平均市價買回股票，淨增加股數 = [(AMP−EP)/AMP] × N，僅於EP < AMP時具稀釋效果）。

快速判斷法：計算每個潛在稀釋性證券的「每股增量效果」，若低於現有基本EPS則為稀釋性，否則為反稀釋性。

Example: EPS with Convertible Preferred Stock

ZZZ Corp.: net income = $4.35M, 2M common shares. 7% preferred, $5M par, convertible at 1.1 shares per $10 par.

Answer

Basic EPS = ($4,350,000 − 0.07 × $5,000,000) / 2,000,000 = ($4,350,000 − $350,000) / 2,000,000 = $2.00

Shares if converted = ($5,000,000 / $10) × 1.1 = 550,000

Diluted EPS = $4,350,000 / (2,000,000 + 550,000) = $1.71

Since $1.71 < $2.00, preferred stock is dilutive. ✓

Quick check: ($5,000,000 × 0.07) / 550,000 = $0.64 < $2.00 basic EPS → dilutive.

中文翻譯

ZZZ Corp.可轉換優先股稀釋EPS計算：

基本EPS = ($435萬 − $35萬) ÷ 200萬股 = $2.00
假設轉換新增股數 = ($500萬 ÷ $10) × 1.1 = 55萬股
稀釋EPS = $435萬 ÷ (200萬 + 55萬) = $1.71
$1.71 < $2.00 → 優先股具稀釋效果 ✓

快速判斷：優先股股利$35萬 ÷ 新增55萬股 = $0.64 < 基本EPS $2.00 → 稀釋性。

Example: EPS with Convertible Debt

YYY Corp.: earnings to common = $2.5M, 1M shares, basic EPS = $2.50. 2,000 bonds × $1,000 par × 5%, each convertible to 120 shares. Tax rate = 30%.

Answer

Shares from conversion = 2,000 × 120 = 240,000

Interest saved (after-tax) = 2,000 × $1,000 × 5% × (1 − 0.30) = $70,000

Diluted EPS = ($2,500,000 + $70,000) / (1,000,000 + 240,000) = $2,570,000 / 1,240,000 = $2.07

$2.07 < $2.50 → convertible debt is dilutive. ✓

Quick check: $70,000 / 240,000 = $0.29 < $2.50 basic EPS → dilutive.

中文翻譯

YYY Corp.可轉換債稀釋EPS計算：

假設轉換新增股數 = 2,000張 × 120股/張 = 24萬股
節省的稅後利息 = 2,000 × $1,000 × 5% × (1−0.30) = $7萬
稀釋EPS = ($250萬 + $7萬) ÷ (100萬 + 24萬) = $2.07
$2.07 < $2.50 → 可轉換債具稀釋效果 ✓

快速判斷：$7萬 ÷ 24萬股 = $0.29 < 基本EPS $2.50 → 稀釋性。

Example: EPS with Stock Options (Treasury Stock Method)

XXX Corp.: earnings to common = $1.2M, 500,000 shares, basic EPS = $2.40. 100,000 options, EP = $15, AMP = $20.

Answer

Net new shares = [($20 − $15) / $20] × 100,000 = 25,000

Diluted EPS = $1,200,000 / (500,000 + 25,000) = $2.29

$2.29 < $2.40 → options are dilutive. ✓

中文翻譯

XXX Corp.股票選擇權（庫藏股法）稀釋EPS計算：

淨增加股數 = [($20 − $15) ÷ $20] × 100,000 = 25,000股
稀釋EPS = $120萬 ÷ (50萬 + 2.5萬) = $2.29
$2.29 < $2.40 → 選擇權具稀釋效果 ✓

庫藏股法邏輯：假設持有人以行使價$15行使選擇權，公司收到款項後以市價$20買回股票，差額即為「淨增加股數」。EP < AMP時才具稀釋效果。

📝 Module Quiz 28.4

1. Hall Corp. had 100,000 shares at the start of the year. Issued 30,000 shares May 1. Issued a 10% stock dividend July 1. Issued 1,000 bonds (each convertible into 21 shares) September 1. Assuming bonds are dilutive, the weighted average shares for diluted EPS is:

A. 132,000.
B. 139,000.
C. 146,000.

B — Basic shares: {[100,000 × 12/12] + [30,000 × 8/12]} × 1.10 = 132,000. Bond shares (after stock dividend): 1,000 × 21 × 4/12 = 7,000. Diluted = 132,000 + 7,000 = 139,000. (LOS 28.d)

2. 300,000 shares outstanding, 100,000 warrants exercisable at $50, average share price $55. Shares for diluted EPS:

A. 9,091.
B. 90,909.
C. 309,091.

C — Net new shares = [($55−$50)/$55] × 100,000 = 9,091. Total = 300,000 + 9,091 = 309,091. (LOS 28.d)

3. 100,000 common shares, earnings = $125,000, 1,000 bonds × 7% × $1,000 par convertible into 25 shares each, tax rate 40%. Diluted EPS is closest to:

A. $1.22.
B. $1.25.
C. $1.34.

B — Basic EPS = $125,000 / 100,000 = $1.25. Check bonds: interest (after-tax) = 1,000 × $1,000 × 7% × 0.6 = $42,000; shares = 25,000; per-share impact = $42,000/25,000 = $1.68 > $1.25 basic EPS → bonds are antidilutive. Diluted EPS = Basic EPS = $1.25. (LOS 28.d)

4. 50,000 common shares, warrants on 50,000 shares exercisable at $20, year-end stock price $25, average price $15. Shares for diluted EPS:

A. 16,667.
B. 50,000.
C. 66,667.

B — The warrants are antidilutive because the average price ($15) is below the exercise price ($20). Year-end price is not relevant. Diluted EPS uses only the common stock denominator = 50,000. (LOS 28.d)

MODULE 28.5: RATIOS AND COMMON-SIZE INCOME STATEMENTS

LOS 28.e

Evaluate a company's financial performance using common-size income statements and financial ratios based on the income statement.

A vertical common-size income statement expresses each line item as a percentage of revenue. This eliminates the effects of size and allows:

Time-series analysis — trends within a firm over time
Cross-sectional analysis — comparison across firms

Exception: income tax expense is more meaningful as a percentage of pretax income (= effective tax rate).

Key income statement ratios:

\[ \text{Gross profit margin} = \frac{\text{Gross profit}}{\text{Revenue}} \] \[ \text{Net profit margin} = \frac{\text{Net income}}{\text{Revenue}} \] \[ \text{Operating profit margin} = \frac{\text{Operating income}}{\text{Revenue}} \]

中文翻譯

垂直共同比損益表將各行項目表示為收入的百分比，消除規模差異，可用於：

時間序列分析：追蹤同一公司各期的趨勢變化
橫向比較分析：與同業公司比較

例外：所得稅費用以稅前利潤為基礎更有意義（即有效稅率）。

重要損益比率：

毛利率 = 毛利 ÷ 收入
淨利率 = 淨利 ÷ 收入
營業利益率 = 營業利益 ÷ 收入

📝 Module Quiz 28.5

1. A vertical common-size income statement expresses each category as a percentage of:

A. assets.
B. gross profit.
C. revenue.

C — Each category is expressed as a percentage of revenue (sales). (LOS 28.e)

2. Which would most likely result in higher gross profit margin, assuming no fixed costs?

A. A 10% increase in the number of units sold.
B. A 5% decrease in production cost per unit.
C. A 7% decrease in administrative expenses.

B — A decrease in per unit production cost reduces COGS and increases gross profit margin. Increasing units sold (with no fixed costs) does not change the margin. Administrative expenses are not part of gross profit. (LOS 28.e)

Key Concepts — Reading 28

LOS 28.a

Revenue is recognized when earned. Converged IFRS/GAAP five-step process: identify contract → identify performance obligations → determine transaction price → allocate price → recognize revenue when obligation satisfied. Principals recognize gross revenue; agents recognize net (commission only).

LOS 28.b

Matching principle: recognize expenses in the same period as the revenue they generate. Capitalization spreads cost over asset life. Compared to expensing, capitalization gives: higher net income and assets in Year 1, lower in subsequent years; lower income variability; higher CFO and lower CFI; higher ROE/ROA in Year 1. Under IFRS, development costs may be capitalized; under U.S. GAAP, both R&D are expensed.

LOS 28.c

Discontinued operations reported separately, net of tax, below continuing operations. Unusual/infrequent items: reported pretax, above continuing operations. Changes in accounting policy: retrospective. Changes in accounting estimate: prospective. Error corrections: retrospective.

LOS 28.d

Basic EPS = (Net income − Preferred dividends) / Weighted avg. shares. Diluted EPS adjusts numerator for convertible preferred dividends and after-tax convertible bond interest; adjusts denominator for shares issuable from conversions and treasury-stock-method options. A security is included in diluted EPS only if it is dilutive (i.e., reduces EPS).

LOS 28.e

A vertical common-size income statement expresses each item as a % of revenue. Gross profit margin = gross profit / revenue. Net profit margin = net income / revenue. Higher margins often result from product differentiation.

中文翻譯 — 重點整理

【LOS 28.a】收入於「賺得」時認列。五步驟：識別合約→識別履約義務→決定交易價格→分配價格→滿足履約義務時認列收入。委託人認列全額收入；代理人僅認列佣金。

【LOS 28.b】配合原則：費用與產生的收入同期認列。資本化將成本分攤至資產使用年限。相較費用化：資本化使第一年淨利/資產/ROA/ROE較高，後續年度較低；收益波動較低；CFO較高、CFI較低。IFRS下開發成本可資本化；U.S. GAAP下研發通常費用化。

【LOS 28.c】停業部門：單獨列示、稅後、列於持續經營損益之後。非常規項目：稅前、列於持續經營損益之中。會計政策變更：追溯重編；會計估計變更：向前適用；錯誤更正：追溯重編。

【LOS 28.d】基本EPS = (淨利−特別股股利)÷加權平均股數。稀釋EPS分子加回可轉換特別股股利及稅後可轉換債利息，分母加入轉換/庫藏股法新增股數。僅稀釋性（降低EPS）的證券才納入計算。

【LOS 28.e】垂直共同比損益表各項目表示為收入百分比。毛利率=毛利÷收入；淨利率=淨利÷收入；營業利益率=營業利益÷收入。