Chance 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, 2021, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2021, at a price of $720,000. The book value of the division's assets was $1,250,000, resulting in a before-tax loss o 24530,000 on the sale. The division incurred a before-tax operating loss from operations of $140,000 from the beginning of the year through December 15. The income tax rate is 25%. Chance's after-tax income from its continuing operations is $670,000. Required: Prepare an income statement for 2021 beginning with income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. (Amounts to be deducted should be indicatec with a minus sign. Round EPS answers to 2 decimal places.) CHANCE COMPANY Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations 2$ 670,000 Discontinued operations: Loss from operations of discontinued component (1,200,000) Income tax benefit Income (loss) on discontinued operations (1,200,000) Net income (loss) $ (530,000) Earnings per share: Income from continuing operations Loss from discontinued operations Net income 24 0.00
Chance 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, 2021, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2021, at a price of $720,000. The book value of the division's assets was $1,250,000, resulting in a before-tax loss o 24530,000 on the sale. The division incurred a before-tax operating loss from operations of $140,000 from the beginning of the year through December 15. The income tax rate is 25%. Chance's after-tax income from its continuing operations is $670,000. Required: Prepare an income statement for 2021 beginning with income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. (Amounts to be deducted should be indicatec with a minus sign. Round EPS answers to 2 decimal places.) CHANCE COMPANY Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations 2$ 670,000 Discontinued operations: Loss from operations of discontinued component (1,200,000) Income tax benefit Income (loss) on discontinued operations (1,200,000) Net income (loss) $ (530,000) Earnings per share: Income from continuing operations Loss from discontinued operations Net income 24 0.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I am stuck on this practice problem. Did I even calculate the loss from operations of discontinued components correctly?
Transcribed Image Text:Chance 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, 2021, the company adopted a plan to sell the assets of the division. The actual sale was completed
on December 15, 2021, at a price of $720,000. The book value of the division's assets was $1,250,000, resulting in a before-tax loss of
$530,000 on the sale.
The division incurred a before-tax operating loss from operations of $140,000 from the beginning of the year through December 15.
The income tax rate is 25%. Chance's after-tax income from its continuing operations is $670,000.
Required:
Prepare an income statement for 2021 beginning with income from continuing operations. Include appropriate EPS disclosures
assuming that 100,000 shares of common stock were outstanding throughout the year. (Amounts to be deducted should be indicated
with a minus sign. Round EPS answers to 2 decimal places.)
CHANCE COMPANY
Partial Income Statement
For the Year Ended December 31, 2021
Income from continuing operations
$
670,000
Discontinued operations:
Loss from operations of discontinued component
(1,200,000)
Income tax benefit
EIncome (loss) on discontinued operations
(1,200.000)
Net income (loss)
24
(530,000)
Earnings per share:
Income from continuing operations
Loss from discontinued operations
ENet income
0.00
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