Examples of gain (or loss) in the following topics:
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- Extra gains or losses are nonrecurring, onetime, unusual, non-operating gains or losses that are recorded by a business during the period.
- Extra gains or losses are the result of unforeseen and atypical events.
- They are nonrecurring, onetime, unusual, non-operating gains, or losses that are recorded by a business during the period.
- As a result, extraordinary gains or losses don't skew the company's regular earnings.
- Examples of extraordinary items are casualty losses, losses from expropriation of assets by a foreign government, gain on life insurance, gain or loss on the early extinguishment of debt, gain on troubled debt restructuring, and write-off of an intangible asset.
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- The disposal sale of an asset is similar to a regular asset sale, where cash proceeds are received and a loss or gain may be realized.
- Depending on whether a loss or gain on disposal was realized, a loss on disposal is debited or a gain on disposal is credited.
- The loss or gain is reported on the income statement.
- The loss reduces income, while the gain increases it.
- A business disposing of a building through a sale receives cash proceeds and may realize a gain or loss.
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- If the monetary exchange is more than the asset's book value, updated for depreciation up to the disposal date, a gain on disposal results; if the proceeds are less, the disposal realizes a loss.
- An involuntary conversion involving an exchange for monetary assets is accounted for the same way as a typical sales transaction, with a gain or loss reported in the income statement in the period the conversion took place.
- The gain or loss is the difference between the proceeds received and the book value of the asset disposed of, updated for current depreciation expense.
- Gains or losses on these transactions are not recognized.
- An airplane manufacturer's involuntary conversion of a plane can result in a loss or gain on the income statement.
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- As a business invests or operates in a foreign country, a changing exchange rate causes gains or losses on international business activities.
- We define these gains or losses as transaction exposure, economic exposure, translation exposure, and tax exposure.
- Consequently, accountants generate accounting gains or losses by using the various exchange rates to calculate a company's financial statements.
- Thus, losses from transaction exposure can reduce taxable income, whereas losses from economic exposure reduce taxable income over future years.
- Thus, companies could gain profit from favorable changes in the exchange rates.
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- The difference between the purchase price and the current fair market value results in an unrealized gain or loss.
- The unrealized gain or loss affects the company's accumulated other comprehensive income, a component of stockholders' equity.
- Realized gains and losses are included in income; unrealized amounts are included in income (trading investments) or in other comprehensive income (available-for-sale investments).
- Using the fair value method, available for sale investment with unrealized gains and losses included in other comprehensive income should have:
- Using the fair value method, available for sale investment with unrealized gains and losses recognized in net income should have:
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- Contingencies are reported as liabilities on the balance sheet and/or disclosed in the notes to the financial statements when it is probable they will incur a loss and when the loss can be reasonably estimated.
- A loss contingency is less than 50% likely to occur due to a past obligation.
- The amount of the loss can not be reliably measured or estimated.
- Gain contingencies are reported on the income statement when they are realized (earned).
- Conservative accounting principles state that companies should report loss contingencies as they occur.
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- Deadweight loss is the decrease in economic efficiency that occurs when a good or service is not priced at its pareto optimal level.
- Deadweight loss is the decrease in economic efficiency that occurs when a good or service is not priced and produced at its pareto optimal level.
- When deadweight loss occurs, it comes at the expense of either the consumer economic surplus or the producer's economic surplus.
- While price controls, subsidies and other forms of market intervention might increase consumer or producer surplus, economic theory states that any gain would be outweighed by the losses sustained by the other side.
- This net harm is what causes deadweight loss.
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- The likelihood of the loss is described as probable, reasonably possible, or remote.
- The ability to estimate a loss is described as known, reasonably estimable, or not reasonably estimable .
- Loss contingencies can refer to contingent liabilities that may arise from discounted notes receivable, income tax disputes, or penalties that may be assessed because of some past action or failure of another party to pay a debt that a company has guaranteed.
- Unlike gain contingencies, losses are reported immediately as long as they are probable and reasonably estimated.
- For losses that are material, but may not occur and their amounts cannot be estimated, a note to the financial statements disclosing the loss contingency is reported.
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- Gain contingencies, or possible occurrences of a gain on a claim or obligation involving the entity, are reported when realized (earned).
- Gain contingencies, or the possible occurrences of a gain on a claim or obligation that involves the entity, are reported when realized (earned).
- If the gain is not probable or its amount cannot be reasonably estimated, but its effect could materially affect financial statements, a note disclosing the nature of the gain is also disclosed in the notes.
- Materiality is a concept or convention within auditing and accounting that relates to the importance/significance of an amount, transaction, or discrepancy.
- Most accounting principles follow the conservative constraint, which encourages the immediate disclosure of losses and expenses on the income statement.
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- A few gains and losses are not shown in the income statement since they are not closed to retained earnings.
- Unrealized gains and losses on available for sale securities (debt and equity)
- Gains and losses on the effective portion of derivatives held as cash flow hedges
- Actuarial gains and losses on recognized defined benefit pension plans (minimum pension liability adjustments)
- All items of income and expense recognized in a period must be included in profit or loss unless a standard or an interpretation requires otherwise.