For its fiscal year ending October 31, 2022, Antonio Corporation reports the following partial income statement data. Income before income taxes Income tax expense (40% X $600,000) Income from continuing operations Gain from discontinued operations Net income $600,000 240,000 360,000 100,000 $460,000 The gain from discontinued operations consists of two parts: a $50,000 loss from operations and a $150,000 gain from the disposal of the operation. The income tax rate is 40% on all items. Instructions: (a) Prepare a corrected income statement, beginning with income before income taxes. (b) Explain in memo form why the income statement data, as presented above, are misleading.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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For its fiscal year ending October 31, 2022, Antonio Corporation reports the following partial income statement
data.
Income before income taxes
Income tax expense (40% X $600,000)
Income from continuing operations
Gain from discontinued operations
Net income
$600,000
240,000
360,000
100,000
$460,000
The gain from discontinued operations consists of two parts: a $50,000 loss froin operations and a $150,000
gain from the disposal of the operation. The income tax rate is 40% on all items.
Instructions:
(a) Prepare a corrected income statement, beginning with income before income taxes.
(b) Explain in memo form why the income statement data, as presented above, are misleading.
Transcribed Image Text:For its fiscal year ending October 31, 2022, Antonio Corporation reports the following partial income statement data. Income before income taxes Income tax expense (40% X $600,000) Income from continuing operations Gain from discontinued operations Net income $600,000 240,000 360,000 100,000 $460,000 The gain from discontinued operations consists of two parts: a $50,000 loss froin operations and a $150,000 gain from the disposal of the operation. The income tax rate is 40% on all items. Instructions: (a) Prepare a corrected income statement, beginning with income before income taxes. (b) Explain in memo form why the income statement data, as presented above, are misleading.
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