Income / Cash Flow

Covers financial statement presentation of income, cash flow and EPS

SEC sends letter to selected issuers about the presentation of cash receipts from inventory sales in the statement of cash flows Feb 2005

SEC summary
SEC disclosure issues
SEC form letter
Letter was reportedly sent to automakers and particularly targeted cash flow treatment of dealer financing and leases
Can affect any company that provides extended payment terms through a note or a sales-type lease
Particularly an issue for companies with captive finance subsidiaries
Caterpillar

2004 Annual Report Financial Appendix

General Motors

2004 Annual Report

Sears Roebuck

Press release 2.15.05
Form 8-K (Item 4.02)
Prompted by SEC review of merger Form S-4
Identified accounting errors related to credit card business
Restates prior accounting periods
Moves credit card cash flows from operating activities to investing activities

Regulation S-X

3-02 Consolidated Statements of Income

3-03 Instructions to Income Statement Requirements

3-04 Changes in Other Stockholders' Equity

5-01 Application of Rules 5-01 to 5-04

5-03 Income Statements

FASB Statements

FASB 130 1997

Reporting Comprehensive Income

FASB 104 1989

Cash Flows - Hedging Transaction

FASB 102 1989

Cash Flows - Hedging Transactions

Cash flows from security and loan trading accounts should be classified as "operating cash flows" see FASB 115 (Marketable Securities)

Also exempts defined benefit pension plans from FASB 95
see FASB 35 (Pensions)

FASB 95 1987

Statement of Cash Flows

Supersedes APB 19

SEC disclosure issues

EITFs on Income Statement Classification

00-14 Coupons, rebates & discounts

00-10 Shipping & handling

99-19 Gross v net

99-17 Barter

SAB 103

Topic 3.A Convertible securities - effect on EPS
Topic 4.D EPS computations in an IPO
Topic 5.Q Increasing Rate Preferred Stock
Topic 6.B Income or loss applicable to common stock
Topic 6.G.1 Selected Quarterly Data ~ S-K 302(a)
Topic 11.B Casino-Hotels - Income statement

Accounting FAQs Mar. 2001

Topic I.B Advertising costs
Topic I.H Write-Offs of prepayments
Topic I.J Extended warranty plans

Current accounting issues Aug. 2001

Topic II.C Disclosures about revenues
Topic II.Q Sales commissions paid

SEC FAQ for Foreign private issuers 5.01.01

SEC's Current accounting issues 2005

Topic II.A Statement of Cash Flows

A.1 Cash receipts from inventory sales
A.2 Settlement of pension liabilities

Related Topics

Non-GAAP Financial Measures

Earnings per Share (EPS)

Regulation S-K 302(a)

Revenue Recognition

Clear Gif