Does anyone know the mnemonic for below the line items on the IS? I think the word “Ideal” is used.
i just look at it as unusual or infrequent items are above the line… i remember that the U in unusual stands for up and that is the only one up above the line… everything else is below…
TJR, I believe the mnemonic is IDEA. I can get back to you on that once I check my notes at home.
I promised to get back to you on the IDEA mnemonic. Here it is: I (ncome from continuing operations) -D (iscontinued operations) -E (xtraordinary items) -A (ccounting policy changes) -------------- Net Income This mnemonic is useful when trying to remember what goes below the line.
I thought it was I(nfrequent and Unusual Items) rather than I(ncome from continuing operations)?
infrequent & unusual items is taken care of under the “E” (extraordinary items)
So, what goes above the line. Is it Income from continuing operations and discontinued operations above the line and then extraordinary and accounting policy changes below the line?
discontinued operations is below the line basically, other than discontinued operations, extraordinary item and accounting changes, everything else is above the line wow, where did this mnemonic come from? is it a schweser study notes thing? I don’t have schweser study notes, so this is the first time I’ve seen this
I heard this at a Stalla review session. It’s not in Schweser.
I have no idea where this mneumonic is from. I haven’t seen it in the Schweser notes.
liaaba, do you know where exactly dividends paid are recorded on the income statement?
Dividends paid are not recorded on the income statement. They are covered in the statement of stockholders equity.
maratikus, that’s what I thought but then on p. 83 in book 3 (Schweser) it says: Net Income = EAT but before dividends. What am I missing?
You are not missing anything Dividends you can either take from company releases or I guess as a difference between net income and Variation of Retained Earnings Dividends are decided later in Shareholders meeting
Why is it important what goes above the line and what goes below the line?
Above-the-line earnings are considered recurring (high quality), and can be used as the basis for projecting future performance.