It is calculated by subtracting SG&A expenses (excluding amortization and depreciation) from gross profit. Condensed statement of comprehensive income does not provide details on whether the firm will succeed. It is based on historical data to compute earnings per share and other past financial records. The Condensed Statement of Comprehensive Income provides the figures of the sales revenue and cost of goods sold.

The statement is divided into time periods that logically follow the company’s operations. The most common periodic division is monthly (for internal reporting), although certain companies may use a thirteen-period cycle. These periodic statements are aggregated into total values for quarterly and annual results. The amounts of OCI are not included in the entity’s net income or retained earnings but just on the OCI component of the statement of comprehensive income. Net income is the difference between revenues and expenses and is obtained from the income statement. On the other hand, OCI includes all other items that are excluded from the purview of the income statement.

Main Purposes of Financial Statements (Explained)

A regular set of condensed financial statements would generally include a statement of comprehensive income, changes in equity, cash flows, financial position, and particular descriptive notes. The condensed financial statements must adhere to Generally Accepted Accounting Principles (GAAP) and may at times be provided to interested parties in lieu of full financial statements. The auditing team conducting an audit of the company will usually view condensed financial statements along with full financial statements for a full picture of the company’s financial standing.

The contribution margin income statement only includes variable expenses in the cost of goods sold, and pushes all fixed production costs lower down in the report. This makes it easier to discern the contribution margin on product and service sales, and to calculate the break even point of a business. Due to practical reasons, the formation of condensed financial accounts usually makes more profit on approximation approaches as related to comprehensive or full financial statements. Condensed financial statements document and calculate assets and liabilities for temporary recording using the financial data available on a year-to-date basis.

Condensed financial statements are a summary form of a company’s income statement, balance sheet, and cash flow statement, usually combined into a single document. These shortened statements are created to provide a quick overview of the company’s financial status with limited detail, and often for internal use only. Operating Income represents what’s earned from regular business operations.

It may be a good idea to receive a full set of financial statements to review as well, as the full statements will contain disclosures and line items that may have been eliminated from the condensed version. First, input historical data for any available time periods into the income statement template in Excel. Format historical data input using a specific format in order to be able to differentiate between hard-coded data and calculated data. As a reminder, a common method of formatting such data is to color any hard-coded input in blue while coloring calculated data or linking data in black. The income statement may have minor variations between different companies, as expenses and income will be dependent on the type of operations or business conducted. However, there are several generic line items that are commonly seen in any income statement.

What is a Condensed Income Statement?

In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Registrants may include additional items that they believe may be useful. There is no SEC requirement for the auditor to report on selected financial data.

• Interim condensed statements of income for the most recent fiscal quarter, for the period between the end of the preceding fiscal year and the end of the most recent fiscal quarter, and for the corresponding periods of the preceding fiscal year.
• Interim periods typically possess financial accounts with a comprehensive or condensed form of financial statements dated less than a fiscal year.
• The total tax expense can consist of both current taxes and future taxes.
• For example, analyze the trend in sales to forecast sales growth, analyzing the COGS as a percentage of sales to forecast future COGS.
• After preparing the skeleton of an income statement as such, it can then be integrated into a proper financial model to forecast future performance.

This statement is a great place to begin a financial model, as it requires the least amount of information from the balance sheet and cash flow statement. Thus, in terms of information, the income statement is a predecessor to the other two core statements. The comparative income statement presents the results of multiple reporting periods in adjacent columns. https://online-accounting.net/ This layout is quite useful for evaluating the results of a business over a period of time, and so is heavily used by financial analysts. The income statement reports on the revenues, expenses, and profits of an organization. There are several types of income statement formats available, which can be used to present this information in different ways.

Understanding Condensed Financials

The cash basis income statement only contains revenues for which cash has been received from customers, and expenses for which cash has been paid to suppliers. Its results can vary from those of an income statement prepared under the accrual basis of accounting. Condensed financial statements show a similar general financial image of the business as any regular financial statements, but in a much more concise manner; each item is condensed to only one line for briefness. The net result for the period of deducting operating expenses from operating revenues. The numbers of operating expenses like selling expenses, administrative expenses, etc. would be presented under Operating expenses. Generally, condensed statement of comprehensive income would show only the headings excluding the details that were being shown its more lucid form i.e. statement of comprehensive income.

This approach is used when there are many line items, thereby aggregating information for easier comprehension. For example, the condensed financial statement offers only one line for the” “total revenues”,” while the full financial account will have the revenue by products, services, operating divisions, interest, and various other sources of revenue. A condensed financial statement is made to deliver quick and accurate information about a business’s financial position and a brief look at where the business’s finances stand during that period. The condensed statement also mentions all the variations in a business’s financial position. Nevertheless, except for substituting comprehensive financial statements, condensed financial statements turn out to be the additional documents or authentic supplementary papers essential during the auditing procedure. A condensed income statement is typically issued to external parties, who are less interested in the precise sources of a company’s revenues or what expenses it incurs, and more concerned with its overall performance.

Condensed statement of comprehensive income

Financial statements (such as the income statement and balance sheet) that summarize much of the detail into a few major lines of information. A condensed income statement is one that summarizes much of the income statement detail into a few captions and amounts. Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. While these drivers are commonly used, they are just general guidelines. There are situations where intuition must be exercised to determine the proper driver or assumption to use.

A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Finally, using the drivers and assumptions prepared in the previous step, forecast future values for all the line items within the income statement. For example, for future gross profit, it is better to forecast COGS and revenue and subtract them from each other, rather than to forecast future gross profit directly. The classified income statement uses subtotals for the gross margin, operating expenses, and non-operating expenses.

Marketing, advertising, and promotion expenses are often grouped together as they are similar expenses, all related to selling. These materials were downloaded from PwC’s Viewpoint (viewpoint.pwc.com) under license. The higher the condensed statement shows about earnings, the more profitable it would be for investors to make a suitable investment. When inspecting condensed elements of financials, it is important to be more careful while observing each item line.

Items that would normally receive several line items are thus condensed into just one line, such as cost of goods sold (COGS) or retained earnings. Disclosures and footnotes that would be found in full financial statements are eliminated. After preparing the skeleton of an income statement as such, it can then be integrated into a proper financial model to forecast future performance. While not present in all income statements, EBITDA stands for Earnings before Interest, Tax, Depreciation, and Amortization.

A condensed statement of comprehensive income is a summary of the income statement and other comprehensive income. The condensed income statement of trading company would summarize different categories of sales into one amount with description of net sales. The details regarding purchases and other changes in inventory are presented under cost of goods sold heading directly. The users of the condensed income statements would find it easier to go through this statement glancing directly at what the company has been doing. That would mean condensed statement of comprehensive income summarizes all the portions of income statement and OCI into few captions and amounts.

The single-step income statement includes subtotals only for revenues and for all expenses. This approach is usually reserved for smaller organizations that have few line items in their income statements. For example, a retailer’s bookkeeping 101 will summarize hundreds of categories of sales into one amount with the description Net Sales. Its detailed purchases and changes in inventory will be presented as one amount with the description Cost of Goods Sold. Perhaps thousands of operating expenses will be presented as one amount with the description Selling, General and Administrative, or SG&A.

Expenses

We have reviewed the condensed consolidated balance sheet of ABC Company and subsidiaries as of March 31, 19X1, and the related condensed consolidated statements of income and cash flows for the three-month periods ended March 31, 19X1 and 19X0. These financial statements are the responsibility of the company’s management. The condensed income statement aggregates the entire income statement into just a few line items, such as one line each for revenues, the cost of goods sold, and operating expenses.