Partial Income Statement
Last Updated :
21 Aug, 2024
Blog Author :
Wallstreetmojo Team
Edited by :
Aaron Crowe
Reviewed by :
Dheeraj Vaidya
Table Of Contents
Partial Income Statement
A partial Income statement is generally prepared by the company when certain or uncertain changes affect the company's financial performance and is reported for only part of the accounting period. Normally, we prepare an income statement for a single month or a year. However, a partial income statement can be prepared for specific dates, from October 2, 2018, to October 29, 2018.
Table of contents
Partial Income Statement Example.
Let’s understand this concept with the help of an example-
Discontinued operations are the operations of that company segment that has been disposed of or sold. As per the accounting regulations, discontinued operations should report separately from continuing operations. Here, we prepare a Partial Income statement of a discontinued operation.
Suppose ABC Company had two segments. One segment manufactured cellular phone equipment and the other manufactured office car vehicle equipment. Under GAAP, each segment is considered a separate component. The cellular phone equipment segment has not been a profitable business segment for the company.
On May 1, 2012, the company planned to dispose of the segment cellular phone. The Company sold the segment on January 31, 2013, for $2,000,000.The book value of this segment was $200,000, and as of December 31, 2012, the fair value of this particular segment was $2,500,000. The segment incurred a before-tax operating loss of $200,000 during the 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 $500,000.
Here, Partial Income Statement will be-
Particulars | Amount ($) | Amount ($) |
---|---|---|
Income from Continuing Operations | 5,00,000.00 | |
Discontinued Operation: | ||
-Income (Loss) from operations | -2,00,000.00 | |
-Income Tax Benefits (Expense) | 70,000.00 | |
Income (loss) from discontinued Operation | -1,30,000.00 | |
Net Income | 3,70,000.00 |
As we can see, this income statement is only reporting information related to discontinued operations. Similarly, we can prepare partial income for the cost of goods sold, gross profit, or other components of an income statement.
Single Step Partial Income Statement
Single step Partial Income statement prepares only for a particular component of Income statements like income statement for the cost of goods sold, discontinued operation, or gross profit, etc. One can prepare this income statement for different components of an Income statement.
Format - Partial Income Statement Discontinued Operations
Partial Income Statement Discontinued Operations | ||
Particulars | Amount ($) | Amount ($) |
Income from Continuing Operations | XXX | |
Discontinued Operation: | ||
Income (Loss) from operations | (XXX) | |
Income Tax Benefits (Expense) | XXX | |
Income (Loss) from discontinued Operation | XXX | |
Net Income | XXX |
Partial Income Statement Cost of Goods Sold | ||
Particulars | Amount ($) | Amount ($) |
Sales | XXX | |
Cost of Goods Sold | ||
Beginning Inventory | (XXX) | |
Purchase Net | XXX | |
Ending Inventory | (XXX) | |
Cost of Goods Sold | XXX | |
Gross Profit | XXX |
Multi-Step Partial Income Statement
A multi-step partial income statement prepares more than one income statement component. It includes two or more two steps of an income statement.
Multi Step Partial Income Statement | ||
Particulars | Amount ($) | Amount ($) |
Sales | XXX | |
Cost of Goods Sold | ||
Beginning Inventory | (XXX) | |
Purchase Net | XXX | |
Ending Inventory | (XXX) | |
Cost of Goods Sold | XXX | |
Gross Profit (Step 1) | XXX | |
Less: Operating Expenses | XXX | |
Net Operating Income (Step 2) | XXX |
Auditors do not certify a partial income statement because it does not include a complete one. It can only be used for a specific purpose. Management uses it when they want to analyze some information about a certain line item of an income statement. It only prepares for internal use; auditors do not prefer this when auditing of financial statements.
Conclusion
Here are some bullet points to understand the partial income statement-
- The partial Income statement reports only some portion of the income statement.
- It reports the information only for the part of the accounting period.
- Companies prepare it only in rare cases, like if one of the segments of the company is discontinued.
- It can be a single step or multi-step statement.
- It is not certified by auditors.
Recommended Articles
This article has been a guide to what is a Partial Income Statement. Here we discuss Partial Income Statement Examples, formats – single step and multi-step- along with their applications. You may learn more about accounting from the following articles –