A company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2016, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2016, at a price of $600,000. The book values of the division's assets was $1,000,000. The division incurred a before tax operating loss of $130,000 from the beginning of the year through December 15. The income tax rate is 40%. The companies after-tax income from continuing operations is $300,000. The pre-tax income from continuing operations for 2016 was SAnswer 1 The amount of tax allocated to income from continuing operations was SAnswer 2 The net loss from operations of the discontinued segment as reported on the income statement for the year 2016 was SAnswer 3 The net loss from disposal of the discontinued segment as reported on the income statement for the year 2016 was SAnswer 4 The net Answer 5 Choose... for the year 2016 was SAnswer 6 Assuming that the weighted average number of common shares outstanding was 100,000 throughout the year, then the company must report EPS from continuing operations as $Answer 7 per share. Assuming that the weighted average number of common shares outstanding was 100,000 throughout the year, then the company must report EPS from discontinued operations as SAnswer 8 per share. Assuming that the weighted average number of common shares outstanding was 100,000 throughout the year, then the company must report EPS from net income as SAnswer 9 per share.
A company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2016, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2016, at a price of $600,000. The book values of the division's assets was $1,000,000. The division incurred a before tax operating loss of $130,000 from the beginning of the year through December 15. The income tax rate is 40%. The companies after-tax income from continuing operations is $300,000. The pre-tax income from continuing operations for 2016 was SAnswer 1 The amount of tax allocated to income from continuing operations was SAnswer 2 The net loss from operations of the discontinued segment as reported on the income statement for the year 2016 was SAnswer 3 The net loss from disposal of the discontinued segment as reported on the income statement for the year 2016 was SAnswer 4 The net Answer 5 Choose... for the year 2016 was SAnswer 6 Assuming that the weighted average number of common shares outstanding was 100,000 throughout the year, then the company must report EPS from continuing operations as $Answer 7 per share. Assuming that the weighted average number of common shares outstanding was 100,000 throughout the year, then the company must report EPS from discontinued operations as SAnswer 8 per share. Assuming that the weighted average number of common shares outstanding was 100,000 throughout the year, then the company must report EPS from net income as SAnswer 9 per share.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:A company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by
generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2016, the company adopted a plan to sell the
assets of the division. The actual sale was completed on December 15, 2016, at a price of $600,000. The book values of the division's assets was $1,000,000. The division
incurred a before tax operating loss of $130,000 from the beginning of the year through December 15. The income tax rate is 40%. The companies after-tax income from
continuing operations is $300,000. The pre- tax income from continuing operations for 2016 was $Answer 1 The amount of tax allocated to income from continuing
operations was $Answer 2 The net loss from operations of the discontinued segment as reported on the income statement for the year 2016 was $Answer 3 The net loss
from disposal of the discontinued segment as reported on the income statement for the year 2016 was $Answer 4 The net Answer 5 Choose... for the year 2016 was
$Answer 6 Assuming that the weighted average number of common shares outstanding was 100,000 throughout the year, then the company must report EPS from
continuing operations as $Answer 7 per share. Assuming that the weighted average number of common shares outstanding was 100,000 throughout the year, then the
company must report EPS from discontinued operations as $Answer 8 per share. Assuming that the weighted average number of common shares outstanding was 100, 000
throughout the year, then the company must report EPS from net income as $Answer 9 per share.
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