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Rainwear Inc., a merchandiser, prepared the following partial income statement before taking into account discontinued operations. Income Statement, Partial Fiscal Year Ended March 31 ($ million) Operating Income $4,078 Other revenues (expenses) 400 Income before income taxes 4,478 Income tax expense 1,120 Net income $3,358 In March, the board of directors of Rainwear Inc. approved a plan to dispose of a business component of Rainwear Inc., considered a discontinued operation. The business component was not sold as of March 31. The business component reported a loss during the current fiscal year of $92 million before tax. The discontinued business component has a book value and fair value (after selling expenses) of $880 million and $920 million, respectively. Neither the potential impact of the sale or the current fiscal year losses related to the discontinued component are reflected in the

Rainwear Inc., a merchandiser, prepared the following partial income statement before taking into account discontinued operations. Income Statement, Partial Fiscal Year Ended March 31 ($ million) Operating Income $4,078 Other revenues (expenses) 400 Income before income taxes 4,478 Income tax expense 1,120 Net income $3,358 In March, the board of directors of Rainwear Inc. approved a plan to dispose of a business component of Rainwear Inc., considered a discontinued operation. The business component was not sold as of March 31. The business component reported a loss during the current fiscal year of $92 million before tax. The discontinued business component has a book value and fair value (after selling expenses) of $880 million and $920 million, respectively. Neither the potential impact of the sale or the current fiscal year losses related to the discontinued component are reflected in the

FINANCIAL ACCOUNTING
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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Rainwear Inc., a merchandiser, prepared the following partial income statement before taking into account discontinued operations. Income Statement, Partial Fiscal Year Ended March 31 ($ million) Operating Income Other revenues (expenses) Income before income taxes Income tax expense Net income $4,078 400 4,478 1,120 $3,358 In March, the board of directors of Rainwear Inc. approved a plan to dispose of a business component of Rainwear Inc., considered a discontinued operation. The business component was not sold as of March 31. The business component reported a loss during the current fiscal year of $92 million before tax. The discontinued business component has a book value and fair value (after selling expenses) of $880 million and $920 million, respectively. Neither the potential impact of the sale or the current fiscal year losses related to the discontinued component are reflected in the statement provided above. Required Revise the partial income statement to reflect the discontinued business segment. Ignore earnings per share disclosures. Assume a tax rate of 25%.
Transcribed Image Text:Rainwear Inc., a merchandiser, prepared the following partial income statement before taking into account discontinued operations. Income Statement, Partial Fiscal Year Ended March 31 ($ million) Operating Income Other revenues (expenses) Income before income taxes Income tax expense Net income $4,078 400 4,478 1,120 $3,358 In March, the board of directors of Rainwear Inc. approved a plan to dispose of a business component of Rainwear Inc., considered a discontinued operation. The business component was not sold as of March 31. The business component reported a loss during the current fiscal year of $92 million before tax. The discontinued business component has a book value and fair value (after selling expenses) of $880 million and $920 million, respectively. Neither the potential impact of the sale or the current fiscal year losses related to the discontinued component are reflected in the statement provided above. Required Revise the partial income statement to reflect the discontinued business segment. Ignore earnings per share disclosures. Assume a tax rate of 25%.
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