The Presentation of Corporate Income and Earned Surplus.

Abstract Committee of Accounting procedure of the American Institute of Accountants in Bulletin No. 35, dealing with the method of presentation of income and earned surplus, makes the recommendation that the net income for the period be shown henceforth without deductions or additions of items which are properly excluded from the determination of net income. These items consist primarily of charges and credits with respect to the following general purpose contingency reserves, discussed in Bulletin No. 28, inventory reserves, discussed in Bulletin No. 31, extraordinary items which, if included, would impair the significance of net income, discussed in Bulletin No. 32 and excessive costs of fixed assets and appropriations in contemplation of replacement of facilities at higher price levels, discussed in Bulletin No. 33. There is no argument with respect to items mentioned in Bulletins 28, 31 and 32 and it is gratifying that the committee recommends the exclusion of such items in the determination of corporate net income.