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Partial Income Statement

Last Updated :

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Blog Author :

WallStreetMojo Team

Edited by :

Ashish Kumar Srivastav

Reviewed by :

Dheeraj Vaidya, CFA, FRM

Partial Income Statement Example.

Let’s understand this concept with the help of an example-

Discontinued operations are the operations of that company segment that has been disposed of or sold. As per the accounting regulations, discontinued operations should report separately from continuing operations. Here, we prepare a Partial Income statement of a discontinued operation.

Suppose ABC Company had two segments. One segment manufactured cellular phone equipment and the other manufactured office car vehicle equipment. Under GAAP, each segment is considered a separate component. The cellular phone equipment segment has not been a profitable business segment for the company.

On May 1, 2012, the company planned to dispose of the segment cellular phone. The Company sold the segment on January 31, 2013, for $2,000,000.The book value of this segment was $200,000, and as of December 31, 2012, the fair value of this particular segment was $2,500,000. The segment incurred a before-tax operating loss of $200,000 during the full accounting year, i.e., January 1, 2012, to December 31, 2012. The income tax for the company is 35%. ABC's after-tax income from continuing operations is $500,000.

Here, Partial Income Statement will be-

ParticularsAmount ($)Amount ($)
Income from Continuing Operations5,00,000.00
Discontinued Operation:
-Income (Loss) from operations-2,00,000.00
-Income Tax Benefits (Expense)70,000.00
Income (loss) from discontinued Operation-1,30,000.00
Net Income3,70,000.00

As we can see, this income statement is only reporting information related to discontinued operations. Similarly, we can prepare partial income for the cost of goods sold, gross profit, or other components of an income statement.

Single Step Partial Income Statement

Single step Partial Income statement prepares only for a particular component of Income statements like income statement for the cost of goods sold, discontinued operation, or gross profit, etc.  One can prepare this income statement for different components of an Income statement.

Format - Partial Income Statement Discontinued Operations

Partial Income Statement Discontinued Operations
ParticularsAmount ($)Amount ($)
Income from Continuing OperationsXXX
Discontinued Operation:
Income (Loss) from operations(XXX)
Income Tax Benefits (Expense)XXX
Income (Loss) from discontinued OperationXXX
Net IncomeXXX
Partial Income Statement Cost of Goods Sold
ParticularsAmount ($)Amount ($)
SalesXXX
Cost of Goods Sold
Beginning Inventory(XXX)
Purchase NetXXX
Ending Inventory(XXX)
Cost of Goods SoldXXX
Gross ProfitXXX

Multi-Step Partial Income Statement

A multi-step partial income statement prepares more than one income statement component. It includes two or more two steps of an income statement.

Multi Step Partial Income Statement
ParticularsAmount ($)Amount ($)
SalesXXX
Cost of Goods Sold
Beginning Inventory(XXX)
Purchase NetXXX
Ending Inventory(XXX)
Cost of Goods SoldXXX
Gross Profit (Step 1)XXX
Less: Operating ExpensesXXX
Net Operating Income (Step 2)XXX

Auditors do not certify a partial income statement because it does not include a complete one. It can only be used for a specific purpose. Management uses it when they want to analyze some information about a certain line item of an income statement. It only prepares for internal use; auditors do not prefer this when auditing of financial statements.

Conclusion

Here are some bullet points to understand the partial income statement-

  • The partial Income statement reports only some portion of the income statement.
  • It reports the information only for the part of the accounting period.
  • Companies prepare it only in rare cases, like if one of the segments of the company is discontinued.
  • It can be a single step or multi-step statement.
  • It is not certified by auditors.