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used for the prior five years-see Analys me statement, identify with numbers the a isposal on se ne sign with your answer to indicate an adjus

used for the prior five years-see Analys me statement, identify with numbers the a isposal on se ne sign with your answer to indicate an adjus

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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In 2019, USP Delivery recorded an impairment loss of $462,000 on its corporate plane. We wish to reformulate the company's income statement and balance sheet under the assumption that the plane had been used for the prior five years-see Analyst Adjustments 6.2 for guidance. The company's tax rate is 25%. a. For the income statement, identify with numbers the adjustments for each of the five years 2015-2019 for: i. Loss on disposal ii. Depreciation iii. Tax expense iv. Net income Use a negative sign with your answer to indicate an adjustment decreases the account. Income Statement Adjustments 2015 2016 2017 2018 Loss on disposal (reversal) Tax Expense (reversal) Net Income (reversal) Depreciation Tax Expense Net income (adjustment) Total net income (reversal + adjustment) i. ii. iii. 92400 -23100 -69300 69300 Deferred tax liability Retained Earnings 0 0 0 92400 -23100 -69300 -69300 0 0 0 92400 -23100 -69300 69300 b. For the balance sheet, identify with numbers the adjustments for each of the five years 2015-2019 for: Accumulated depreciation Deferred tax Retained earnings Use a negative sign with your answer to indicate an adjustment decreases the account. Balance Sheet Adjustments 2015 2016 2017 2018 2019 Accumulated depreciation 0 0 0 92400 -23100 -69300 -69300 0 0 0 2019 0 0 0 -462000 115500 -346500 -92400 23100 69,300 277,200
Transcribed Image Text:In 2019, USP Delivery recorded an impairment loss of $462,000 on its corporate plane. We wish to reformulate the company's income statement and balance sheet under the assumption that the plane had been used for the prior five years-see Analyst Adjustments 6.2 for guidance. The company's tax rate is 25%. a. For the income statement, identify with numbers the adjustments for each of the five years 2015-2019 for: i. Loss on disposal ii. Depreciation iii. Tax expense iv. Net income Use a negative sign with your answer to indicate an adjustment decreases the account. Income Statement Adjustments 2015 2016 2017 2018 Loss on disposal (reversal) Tax Expense (reversal) Net Income (reversal) Depreciation Tax Expense Net income (adjustment) Total net income (reversal + adjustment) i. ii. iii. 92400 -23100 -69300 69300 Deferred tax liability Retained Earnings 0 0 0 92400 -23100 -69300 -69300 0 0 0 92400 -23100 -69300 69300 b. For the balance sheet, identify with numbers the adjustments for each of the five years 2015-2019 for: Accumulated depreciation Deferred tax Retained earnings Use a negative sign with your answer to indicate an adjustment decreases the account. Balance Sheet Adjustments 2015 2016 2017 2018 2019 Accumulated depreciation 0 0 0 92400 -23100 -69300 -69300 0 0 0 2019 0 0 0 -462000 115500 -346500 -92400 23100 69,300 277,200
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