Where would "asset impairment and store closing charges" appear on a multiple-step income statement? I am not quite sure if it goes under operating expenses or other income and expenses. Could someone please clarify this for me?
To determine where "asset impairment and store closing charges" would appear on a multiple-step income statement, we need to understand the nature of these charges.
Asset impairment refers to a reduction in the value of an organization's long-term assets, such as property, plant, and equipment. Store closing charges are expenses incurred when a company decides to shut down a particular store location.
Typically, these charges are considered as non-operating expenses because they do not relate to the company's primary business operations. Non-operating expenses are items that are not directly related to a company's core revenue-generating activities.
On the multiple-step income statement, the operating section usually includes revenues and expenses directly related to a company's regular operations. Thus, "asset impairment and store closing charges" would not be included in the operating expenses.
Non-operating items are generally reported separately after the operating section in the income statement's "Other Income and Expenses" section. This section includes items like interest income, interest expense, gains, and losses from the sale of assets, as well as any unusual or infrequent expenses or income.
Therefore, "asset impairment and store closing charges" would typically be reported in the "Other Income and Expenses" section of a multiple-step income statement.
It is important to note that accounting practices can vary between companies, and it is always best to consult the specific financial statements or disclosures of a company to determine the precise classification and location of these charges on their income statement.