net loss

Examples of net loss in the following topics:

• Accounting Methodologies: Amortized Cost, Fair Value, and Equity

  • These securities are reported at fair value, with unrealized gains and losses included in earnings.
  • These securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders' equity (Other Comprehensive Income).
  • The investor's proportional share of the associate company's net income increases the investment (a net loss decreases the investment), and proportional payment of dividends decreases it.
  • In the investor's income statement, the proportional share of the investee's net income or net loss is reported as a single-line item.The ownership of more than 50% of voting stock creates a subsidiary.

• Profit Margin

  • Net profit is the gross profit minus all other expenses.
  • The gross profit margin calculation uses gross profit and the net profit margin calculation uses net profit .
  • It is difficult to accurately compare the net profit ratio for different entities.
  • There is a higher risk that a decline in sales will erase profits and result in a net loss or a negative margin.
  • The percentage of net profit (gross profit minus all other expenses) earned on a company's sales.

• Defining the Income Statement

  • The income statements reports the revenues, expenses, and overall net profit or loss over a given reporting period.
  • The income statement is therefore a linear assessment, starting with revenue and ending with net gains or losses, of the overall costs of a given production process.
  • After all of the items have been added or subtracted accordingly from the starting revenue, the income statement will display the overall net income or net loss.
  • This is where investors and stakeholders derive profit margin: net income/revenue.
  • The income statement starts with revenues, minuses costs and expenses, and results in a net gain or loss.

• Introduction to Deadweight Loss

  • This net harm is what causes deadweight loss.
  • Deadweight loss can be visually represented on supply and demand graphs .
  • Known as Harberger's triangle, the deadweight loss equals the area within the following three points:
  • As a result all of the goods that might have been produced and consumed if the good was priced optimally are not, representing a net loss for society.
  • The amount of deadweight loss is shown by the triangle highlighted in yellow.

• Extraordinary Gains and Losses

  • 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.
  • (IAS 1.87) The amount of each of these gains or losses, net of the income tax effect, is reported separately in the income statement.
  • Net income is reported before and after these gains and losses.
  • 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.

• Operating Expenses, Non-Operating Expenses, and Net Income

  • Operating expenses and non operating expenses are deducted from revenue to yield net income.
  • When net income is positive, it is called profit.
  • When negative, it is a loss.
  • Net income increases when assets increase relative to liabilities.
  • Operating expenses, non operating expenses and net income are three key areas of the income statement.

• Preparation of the Statement of Cash Flows: Indirect Method

  • This leaves us with the amount of $9,000 for net income.
  • items that were included in net income but did not affect cash.
  • An increase in an asset account is subtracted from net income, and an increase in a liability account is added back to net income.
  • This method converts accrual-basis net income (or loss) into cash flow by using a series of additions and deductions.
  • This leaves us with the amount of $9,000 for net income.

• Net Income

  • Net income in accounting is an entity's income minus expenses for an accounting period.
  • It is computed as the residual of all revenues and gains over all expenses and losses for the period and has also been defined as the net increase in stockholder's equity that results from a company's operations.
  • Net income is a distinct accounting concept from profit.
  • In contrast, net income is a precisely defined term in accounting.
  • As profit and earnings are used synonymously for income (also depending on United Kingdom and U.S. usage), net earnings and net profit are commonly found as synonyms for net income.

• Cost of Buildings

  • Since buildings are subject to depreciation, their cost is adjusted by accumulated depreciation to arrive at their net carrying value on the balance sheet.
  • The building's net carrying value or net book value, on the balance sheet is $110,000.
  • If at a future date a building is sold due to a business relocation or other reason, any gain or loss on the sale is based on the difference between the building's net book value and the market sales price.
  • If the sale results in a gain, the excess received over the building's net book value is disclosed on the income statement as an increase to the accounting period's income.
  • If the sale results in a loss and the business receives less than book value, the loss is also disclosed on the income statement as a decrease to income.

• Loss Contingencies

  • A footnote can also be included to describe the nature and intent of the loss.
  • The likelihood of the loss is described as probable, reasonably possible, or remote.
  • At least a minimum amount of the loss expected to be incurred is accrued.
  • 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.
  • The indirect method adjusts net income (rather than adjusting individual items in the income statement).