Exercise 4-6 (Algo) Discontinued operations [LO4-4, 4-5] 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 $740,000. The book value of the division's assets was $1,290,000, resulting in a before-tax loss of $550,000 on the sale. The division incurred a before-tax operating loss from operations of $160,000 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 $690,000. 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.) Answer is complete but not entirely correct. CHANCE COMPANY Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations Discontinued operations: Loss from operations of discontinued component Income tax benefit Income (loss) on discontinued operations Net income (loss) Earnings per share: Income from continuing operations Loss from discontinued operations Net income 33 99 (710,000) 177,500✔ 710,000 X S S $ $ 690,000 177,500 867,500 6.90 (5.33) 1.57
Exercise 4-6 (Algo) Discontinued operations [LO4-4, 4-5] 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 $740,000. The book value of the division's assets was $1,290,000, resulting in a before-tax loss of $550,000 on the sale. The division incurred a before-tax operating loss from operations of $160,000 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 $690,000. 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.) Answer is complete but not entirely correct. CHANCE COMPANY Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations Discontinued operations: Loss from operations of discontinued component Income tax benefit Income (loss) on discontinued operations Net income (loss) Earnings per share: Income from continuing operations Loss from discontinued operations Net income 33 99 (710,000) 177,500✔ 710,000 X S S $ $ 690,000 177,500 867,500 6.90 (5.33) 1.57
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Exercise 4-6 (Algo) Discontinued operations [LO4-4, 4-5]
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 $740,000. The book value of the division's assets was $1,290,000, resulting in a before-tax loss of
$550,000 on the sale.
The division incurred a before-tax operating loss from operations of $160,000 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 $690,000.
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.)
Answer is complete but not entirely correct.
CHANCE COMPANY
Partial Income Statement
For the Year Ended December 31, 2021
Income from continuing operations
Discontinued operations:
Loss from operations of discontinued component
Income tax benefit
Income (loss) on discontinued operations
Net income (loss)
Earnings per share:
Income from continuing operations
Loss from discontinued operations
Net income
33
♥
(710,000)✓
177,500
710,000 X
$ 690,000
$
$
$
177,500
867,500
6.90
(5.33)
1.57](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F71c62432-424c-48fc-9429-fbf223070673%2Fd1b170ba-8758-4666-933c-c4118cd7f283%2Fttr664s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 4-6 (Algo) Discontinued operations [LO4-4, 4-5]
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 $740,000. The book value of the division's assets was $1,290,000, resulting in a before-tax loss of
$550,000 on the sale.
The division incurred a before-tax operating loss from operations of $160,000 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 $690,000.
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.)
Answer is complete but not entirely correct.
CHANCE COMPANY
Partial Income Statement
For the Year Ended December 31, 2021
Income from continuing operations
Discontinued operations:
Loss from operations of discontinued component
Income tax benefit
Income (loss) on discontinued operations
Net income (loss)
Earnings per share:
Income from continuing operations
Loss from discontinued operations
Net income
33
♥
(710,000)✓
177,500
710,000 X
$ 690,000
$
$
$
177,500
867,500
6.90
(5.33)
1.57
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education