[Verse 1] When a company makes a sale, when do we record the gain? IFRS fifteen and ASC six-oh-six explain the same Five steps to recognize revenue properly Contract identified, performance obligations clearly Transaction price determined, allocate it right Satisfy performance, then record it bright [Chorus] Income statement tells the story Revenue minus expenses shows the glory Match the costs to revenues earned Quality earnings must be learned Basic EPS and diluted too Comprehensive income's part of view [Verse 2] Matching principle guides expense recognition Costs should match the revenues in precision Depreciation spreads the asset's cost Straight line, declining balance, units produced Capitalize if benefits future years Expense immediately if value disappears [Chorus] Income statement tells the story Revenue minus expenses shows the glory Match the costs to revenues earned Quality earnings must be learned Basic EPS and diluted too Comprehensive income's part of view [Verse 3] Non-recurring items need special care Discontinued operations separate and fair Unusual or infrequent, mark them clear Don't let them cloud the regular year Quality earnings show the truth Cash flows matter, that's the proof [Bridge] Red flags wave when earnings managed Accruals high and cash flow damaged Conservative or aggressive style Affects the numbers all the while Anti-dilutive securities don't count Diluted EPS is paramount [Verse 4] Basic EPS takes net income clean Divided by shares outstanding mean Diluted adds potential shares From options, warrants, bonds that convert pairs Other comprehensive income flows To equity where pension adjustments go [Chorus] Income statement tells the story Revenue minus expenses shows the glory Match the costs to revenues earned Quality earnings must be learned Basic EPS and diluted too Comprehensive income's part of view [Outro] From revenue recognition to the bottom line Quality and clarity help the numbers shine
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