Financial Reporting of Net Losses and Retained Earnings

question 65

Essay

Financial reporting of net losses and retained earnings
A recent annual report of Dobbs,Inc. ,reported a net loss of approximately $63 million and retained earnings of approximately $1.6 billion.
(a)Which financial statement shows computation of the $63 million net loss?
(b)Which financial statement includes the retained earnings figure of $1.6 billion?
(c)Explain how it is possible for Dobbs to report both a net loss of $63 million and retained earnings of $1.6 billion in a single set of financial statements.

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Definitions:

Current Values

The present market value of an asset or financial instrument, which can fluctuate over time based on market conditions.

Asset Accounts

consist of all accounts that track the assets owned by an entity, including cash, inventory, property, and equipment.

Cost

The amount of money required to purchase something or the value of the resources expended to acquire an item or service.

Fair Market Value

The price at which an asset would sell in an open and competitive market where both buyer and seller are knowledgeable, willing, and under no pressure to buy or sell.