I am confused as to what is to be included in extraordinary item. Could you help me take a look at my figures? I hope it is not too much to ask!
Currently, I am looking at the company: Align Tech (AGLN)
Referring to the Income statement of 2020.
2020: There is a huge increase in provision from income taxes because of some intellectual property transfer. Does this belong under extraordinary item?
2019: I am very confused with the +/- sign for the extraordinary items as well.
- Litigation settlement gains (+51)
- Impairment and other charges (-22.9)
- Provision for income taxes (-112)
Do I put in the values like this? Do all of these belong under extraordinary items?
https://drive.google.com/file/d/1nzxdKR7hvvsqTXSiK336tQegqnvDYp1z/view?usp=sharing (Link to my excel spreadsheet)- Let me know if you can view it.
Thank you so much! Hope to hear from you soon!!
Great effort and keep up the good work :)
2020 – The tax is a positive figure (tax benefit) that push up the earnings. Tax in general is a negative figure that is deduct from their earnings. You are right that is a one-off item. You need to look at their average past 5 years tax percentage and roughly estimate the tax that should be paid in 2020 and deduct from their net profit. Take the net income ($1775.9m) – tax benefit ($1396.9m) – possible tax ($??)
2019 – Litigation settlement is a gain of 51m should be deduct from net income while Impairment and other charges should be added back. There is no need to adjust provision income taxes as it is a negative figure. The only time, you need to adjust is when the figure is positive or there is one-off increase in tax. Take the net income ($442.8m) – Litigation settlement ($51m) + Impairments and other charges ($23m)
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