ABC Company had income from continuing operations of $820,000 (after taxes) in 2023. In addition, the following information, which ha been considered, is as follows. 1. During 2023, ABC discovered that it failed to record depreciation in amount of $200,000 in 2020. 2. ABC decided to discontinue its stereo division in 2023, During the year, the stereo division had sales revenues of $300,000 and opera expenses of $450,000. 3. The stereo division was sold late in the year for $140,000. The book value of the division's assets was $110,000. Instructions Present in good form a partial income statement for ABC Company (inlcuding EPS disclosure) for the calendar year 2023 start with "Income from continuing operations." Assume that ABC's tax rate is 30% and 100,000 shares of common stock were outstanding during

ABC Company had income from continuing operations of $820,000 (after taxes) in 2023. In addition, the following information, which ha been considered, is as follows. 1. During 2023, ABC discovered that it failed to record depreciation in amount of $200,000 in 2020. 2. ABC decided to discontinue its stereo division in 2023, During the year, the stereo division had sales revenues of $300,000 and opera expenses of $450,000. 3. The stereo division was sold late in the year for $140,000. The book value of the division's assets was $110,000. Instructions Present in good form a partial income statement for ABC Company (inlcuding EPS disclosure) for the calendar year 2023 start with "Income from continuing operations." Assume that ABC's tax rate is 30% and 100,000 shares of common stock were outstanding during

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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19. In ABC Food Co.'s 2023 single-step income statement, the section titled "Revenues" consisted of the following: Net sales revenue Results from discontinued operations: Loss from discontinued component Z including loss on disposal of P1,200 Less: Tax benefit Interest revenue Gain on sale of equipment Cumulative change in 2021 and 2022 income due to change in depreciation method (net of P750 tax effect) Total revenues 16,400 4,000 187,000 (12,400) 10,200 4,700 1,500 191,000 In the revenues section of the 2023 income statement, how much total revenue should ABC Food report?
Trancor Ltd has been in operation for over 60 years. It has a standard straight-line depreciation policy for all its fixed assets. A new CFO was appointed in January 2020 and after review of the financial statements questioned the large write off of assets in December 2019. The Accountant stated these assets were computers and were not being used as the technology was obsolete. New computers were purchased on March 1, 2019 to replace the old ones and these were being depreciated over 5 years using the current policy. The CFO after discussion with management agreed that the reducing balance method at a rate of 30% per annum is more suitable for the computers and instructed the Accountant to make the changes to the depreciation policy. This change meets the requirements of a change in accounting policy. The scrap value of the computers is $5,000. The Balance Sheet extract for December 31, 2019 was as follows: Computers at cost 80,000 Accumulated depreciation…
In 2017, Bramble Corporation discontinued its retail store operations to focus on its online opportunities. The elimination of these retail operations is properly considered a discontinued operation. During the current year, its store operations lost $ 750,000 (net of tax) while its online operations reported a profit of $ 3,210,000 (net of tax). Bramble sold the store operations at the end of the year at a loss of $ 1,360,000 (net of tax). Prepare an income statement for 2017 beginning with line item "Income from continuing operations." BRAMBLE CORPORATION Partial Income Statement %24 %24 > > >
On July 2, 2013, Sable Company purchased a building for $300,000 that had an estimated residual value of $46,000 and an expected useful life of ten years. Sable Company has a December 31st, year end. If Sable Company uses the Declining Balance Method at the straight-line rate, the depreciation expense for year two is: $27000, $28500, $25400, $30000, or none of the above
Altima Corporation discovered an error in its 2020 financial statements. The firm recorded $4,200,000 in depreciation expense instead of record $4,500,000. Altima has a constant tax rate of 40% and reports 3 years of comparative income statements and 2 years of comparative balance sh- in its annual report. Ignoring the income tax effect, what is the correct journal entry to record the prior-period adjustment? O Depreciation expense Accumulated Depreciation O Retained Earnings 300,000 Income Tax Payable Accumulated Depreciation Retained Earnings O Accumulated Depreciation 300,000 Retained Earnings Accumulated Depreciation 300.000 estion 22 300,000 300,000 120.000 180,000 300,000 300,000
In 2025, Sandhill Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1299900 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Sandhill properly included depreciation on its tax return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%. Income before depreciation expense in 2025 was $400000. What was the impact on the following accounts at the start of 2025? Accumulated Depreciation was understated by $86660 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was understated by $43330 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was overstated by $43330 and net income was understated by $43330. O Accumulated Depreciation was understated by $43330 and net income was overstated by $43330.
During 2017, Liselotte Company reported income of$1,500,000 before income taxes and realized a gain of$450,000 on the disposal of assets related to a discontinuedoperation. The criteria for classification as a discontinued operation is appropriate for this sale. The income issubject to income taxation at the rate of 34%. The gainon the sale of the plant is taxed at 30%. Indicate anappropriate presentation of these items in the incomestatement.
See the explanation below to work the problem. XYZ Company, a 'for-profit' business, had revenues of $12 million in 2022. Expenses other than depreciation totaled 75 percent of revenues. XYZ Company, must pay taxes at a rate of 40 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Depreciation originally was $1.5 million; however, a change in the depreciation schedule (still within GAAP) has now made the depreciation expense DOUBLE. Based on this change in depreciation expense, what would XYZ's net income now be? Select one or more: a. so b. $3,000,000 c. $1,500,000 Od. Not enough information to tell
During 2020, Liselotte Company reported income of $1,500,000 before income taxes and realized a gain of $450,000 on the disposal of assets related to a discontinued operation. The criteria for classification as a discontinued operation is appropriate for this sale. The income is subject to income taxation at the rate of 34%. The gain on the sale of the plant is taxed at 30%. Indicate an appropriate presentation of these items in the income statement.
Esquire Comic Book Company had income before tax of $1,250,000 in 2024 before considering the following material items: 1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accountin principles. The before-tax loss on disposal was $365,000. The division generated before-tax income from operations from the beginning of the year through disposal of $550,000. 2. The company incurred restructuring costs of $80,000 during the year. Required: Prepare the income statement for Esquire beginning with income from continuing operations. Assume an income tax rate of 25% Ignore EPS disclosures. Note: Amounts to be deducted should be indicated with a minus sign. ESQUIRE COMIC BOOK COMPANY Partial Income Statement For the Year Ended December 31, 2024 Income from continuing operations Discontinued operations. Gain on sale of assets Income from operations of discontinued component Income tax benefit. Income tax expense
Vaughn Company changed depreciation methods in 2020 from double-declining-balance to straight-line. Depreciation prior to 2020 under double-declining balance was $82,300, whereas straight-line depreciation prior to 2020 would have been $45,800. Vaughn's depreciable assets had a cost of $252,700 with a $43,200 salavage value, and an 8-year useful life at the beginning of 2020. Prepare the 2020 journal entry related to Vaughn's depreciable assets (Equipment)
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