The presentation of income statement & retained earning account is not appropriate

According to accounting standard the income statement include all the expense &
revenue for the period it prepared. In addition to normal items of revenue &
expenditure, it should include the extraordinary items for the period as a
comprehensive income & expenditure.
Thus the income statement is either made as comprehensive income statement or made
in two parts:
An income statement displaying items of profit & loss, and
A statement of comprehensive income that begins with profit & loss & display
component of comprehensive income & expenditure.
In the Nerwin Company presentation all items are shown together which a wrong
presentation is. The normal items should be segregate from the irregular items.

Threfore the first three :

a)Selling, general, and administrative expenses-should be reported in income before

extraordinary items as this is material

b) loss on sale of equipment-this is an extraordinary item and should be reported

separately because nelson is not in the business of purchase and sale of euipment

c)Adjustment required for correction of an error-again this is an extraordinary

item and hence reported separately

According to IAS 1 requires an entity to present a statement of changes in equity

as a separate component of the financial statements. The statement must show: [IAS
1.106]
�total comprehensive income for the period, showing separately amounts attributable
to owners of the parent and to non-controlling interests
�the effects of retrospective application, when applicable, for each component
�reconciliations between the carrying amounts at the beginning and the end of the
period for each component of equity, separately disclosing:

profit or loss
each item of other comprehensive income
transactions with owners, showing separately contributions by and
distributions to owners and changes in ownership interests in subsidiaries that do
not result in a loss of control
The following amounts may also be presented on the face of the statement of changes
in equity, or they may be presented in the notes: [IAS 1.107]
�amount of dividends recognized as distributions, and
�the related amount per share

According to IAS 1 the company should disclose the dividend per share in the notes
to financial statement. EPS should not be disclosed in the notes to the financial
statement.

Hence EPS should be disclosed on the face of income statement not in the notes