Partial Income Statement

Partial Income Statement

A partial Income statement is generally prepared by the company when there are certain or uncertain changes which affect the company’s financial performance and is reported for only a part of the accounting period. Normally, we prepare an income statement for a single month or for a year. However, a partial income statement can be prepared for the specific dates like from October 2, 2018, to October 29, 2018.

Partial Income Statement Example.

Let’s understand this concept with the help of an example-

Discontinued operations are the operations of that segment of the company which has been disposed of or sold. As per the accounting regulations discontinued operations should be reported separately from continuing operations. So, for this, we need to prepare a Partial Income statement of discontinued operation

Suppose ABC Company had two segments. One segment manufactured cellular phone equipment and other segment manufactured office car vehicles equipment. Under GAAP, each segment is considered separate components. The cellular phone equipment segment has not been a profitable business segment for the company.

On May 1, 2012, the company plans to dispose of the segment cellular phone. The segment was sold on January 31, 2013, at a price of $2,000,000.The book value of this segment was $200,000 and as on 31st December 2012, the fair value of this particular segment was $2,500,000. The segment incurred a before-tax operating loss from operation of $200,000 during its full accounting year i.e., January 1, 2012, to December 31, 2012. The income tax for the company is 35%. ABC’s after-tax income from continuing operations is $500,000.

So for this Partial Income Statement will be-

As we can see this income statement is only reporting information related to discontinued operations. Similarly, we can prepare partial income for the cost of goods sold, gross profit or other components of an income statement.

Single Step Partial Income Statement

Single step Partial Income statement prepares only for a particular component of Income statements like income statement for the cost of goods sold, discontinued operation, or gross profit etc.  One can prepare this income statement for different components of an Income statement.

Format – Partial Income Statement Discontinued Operations

Note –

Multi-Step Partial Income Statement

Multi-step partial income statement prepares more than one components of Income Statement. It included two or more than two steps of an income statement.

Auditors do not certify a partial income statement because it does not include a complete income statement. It can only be used for a specific purpose and used by the management where management wants to analyze some information about certain line item of an income statement. It only prepares for the internal use; auditors do not prefer this at the time of auditing of financial statements.

Conclusion

Here are some bullet points to understand partial income statement-

• It reports only some portion of the income statement.
• It reports the information only for the part of the accounting period.
• It is prepared only in rare cases when one of the segments of the company is discontinued.
• It can be a single step and multi-step statement
• It is not certified by auditors.

Recommended Articles

This has been a guide to what is Partial Income Statement. Here we discuss Partial Income Statement Examples, formats – single step and multi-step along with its applications. You may learn more about accounting from the following articles –

• Example of Income Statement (Using IFRS Format)
• Multi-Step Income Statement Example
• Comparative Income Statement
• Operating Profit Margin
• What is Net Loss?
• Fiscal Year vs Calendar Year Differences
• Profit vs Income Differences