Question

Describe susbtainabe income and the importance of sustainable income in the evaluation of the income statement. Choose at least two items or events that will affect sustainable income of a company. Propose that manner in which you would disclose these items or events to investors. Justify your response.

Answer 1

1.Sustainable income is the most likely level of income to be obtained in the future.

2.net income adjusted for irregular items is referred to as sustainable income

IMPORTANCE

1.It helps in active participation of organisation in their societies

2.it helps users to derive an estimate of future earnings without the noise of irregular items.

if there are any tax savings for the losses incurred from irregular items such tax savings should be reduced from the losses incurred from irregular items..