What does net of tax mean on the CPA exam?
Net of tax. Stated after the tax effect has been taken out. Discontinued operations and most items of other comprehensive income are presented this way.
Defined against ASC 220-10-45-11.
Which CPA exam sections use net of tax?
Net of tax appears in the FAR section of the CPA exam.
Other terms defined against ASC 220-10
- income statement: The statement of what was earned and spent over a period, ending in net income.
- net income: What is left after every revenue and expense of the period, including tax and discontinued operations.
- other comprehensive income: Gains and losses that bypass net income and sit in equity until realized, such as unrealized gains on available-for-sale debt securities and foreign currency translation.
Related terms
- change in accounting principle: A switch from one acceptable principle to another, allowed only when a new standard requires it or the new principle is preferable.
- continuing operations: Everything the entity still does, as opposed to a component it has disposed of or classified as held for sale.
- effective portion: The part of a cash flow hedge's gain or loss that actually offsets the hedged risk.
- functional currency: The currency of the main economic environment in which an entity operates, which is usually where it generates and spends cash.