The first question requires a description of sustainable income in income statement evaluation. The second part is to choose two events or items that have an effect on sustainable income. First, you gave a good description of sustainable income. However, you skipped an important part, defining sustainable income before getting into detail about it. I feel your description does not start off easy to the technical – it jumps in directly to the technical.
Including a definition of sustainable income provides a better flowing description. Therefore, according to Kimmel, Weygandt, & Kieso (2016), sustainable income is the most likely income level attainable by a company in the future. It would have also been a good idea to describe sustainable income on the basis of how it differs from net income. This depth description would be a good answer to the first part of the question. Sustainable income differs from actual net income by the unusual amounts of revenue, expenses, gains, and losses in a financial year. This statement helps flow to the next part of describing sustainable income.
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It is very easy to determine what events or items you selected that affect sustainable income because you include a straightforward sentence. Discontinued operations and comprehensive income are very good examples of items that affect sustainable income. Good work for including an example. Great job on the second part of question one.
Your answer to the second question is also very correct. However, I believe the two items are also disclosed in the income statement. The income statement provides information on sustainable income. However, the statement of comprehensive income will disclose all the items that led up to the unusual item. The comprehensive income statement will show the elements of discontinued operations and comprehensive income that affect the net income as shown in the income statement (Weygandt, Kimmel, & Kieso, 2015).
Conclusion
Overall, you gave good answers to the questions. The answers however needed some additional information to gain more points. It is very important to have a good flow in what you write. Develop an answer from the easy to the technical. Great work!
References
Kimmel, P., Weygandt, J., & Kieso, D. (2016). Accounting: Tools for Business Decision Making (6th ed.). Hoboken: John Wiley & Sons.
Weygandt, J., Kimmel, P., & Kieso, D. (2015). Financial & Managerial Accounting. Hoboken, NJ: Wiley.
