Partial income statement definition
/What is a Partial Income Statement?
A partial income statement reports information for only part of a normal accounting period. This tends to be a special-purpose document that is only used once. For example, a company may have acquired another business in the middle of a month, and so only needs the financial results of the acquiree for the remaining days of the accounting period for consolidation purposes. Or, there has been a corporate restructuring partway through an accounting period, for which the financial statement users only want to see the results after the restructuring was completed. In all other respects, a partial income statement has the normal structure of a regular income statement - it shows net sales, a cost of goods sold, and other expenses that result in a profit or loss.
A more accurate use of the term "partial income statement" is when only a portion of an income statement is presented. For example, you might want to emphasize only the top half of the income statement, showing revenues less the cost of goods sold, and arriving at the gross margin. Alternatively, you may only want to present selling and administrative expenses, or only other comprehensive income, or only the results associated with discontinued operations.
It can be extremely misleading to present such snippets of information, so be sure to state which line items are being disclosed, preferably in the header of the partial income statement.
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Example of a Partial Income Statement
For example, a full income statement would report the results for all of February, whereas a partial income statement might only report the company's results for the period from February 21 to February 28. This is not the best use of the term "partial," since the income statement is still reporting all results in full, but for just a limited time period. Thus, the header for such an income statement might be:
ABC Company
Income Statement
For the period February 21-28, 20X1
The report format of the partial income statement would then follow the normal format of a regular income statement, such as noted in the following exhibit.
When to Use a Partial Income Statement
A partial income statement should only be used for very specific purposes, where you are trying to make a point about certain line items in the statement. It should never be included in an otherwise full set of financial statements without complete disclosure. A partial income statement will never be certified by an auditor, since it does not comprise a complete income statement.