
Income statement presentation; Discontinued operations; EPS
• LO4–1, LO4–3, LO4–4, LO4–5
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2018 ($ in thousands):
Net sales | $18,000 |
Interest income | 200 |
Interest expense | 350 |
Cost of goods sold | 10,500 |
Selling and administrative expenses | 2,500 |
Restructuring costs | 800 |
In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $1.6 million and a gain on disposal of the component’s assets of $2 million. 500,000 shares of common stock were outstanding throughout 2018. Income tax expense has not yet been recorded. The income tax rate is 30% on all items of income (loss).
Required:
Prepare a multiple-step income statement for 2018, including EPS disclosures.

Income Statement
The financial statement which reports revenues and expenses from business operations and the result of those operations is reported as net income or net loss for a particular time period is referred to as income statement.
Earnings per Share (EPS)
The share or portion of profit earned by each share is called as earnings per share.
To Prepare: A multiple-step income statement for Company R for 2018, along with EPS disclosure.
Explanation of Solution
Multi -step income statement
A multiple step income statement refers to the income statement that shows the operating, and non-operating activities of the business, under separate head.
Prepare multi-step income statement for Company R for 2018, along with EPS disclosure.
COMPANY  R | ||
Income Statement | ||
For the Year Ended December 31, 2018 | ||
Particulars | Amount ($ in thousands) | Amount ($ in thousands) |
Sales revenue | 18,000 | |
Cost of goods sold | 10,500 | |
Gross profit | 7,500 | |
Less: Operating expenses: | ||
Selling and administrative | 2,500 | |
Restructuring costs | 800 | |
3,300 | ||
Operating income | 4,200 | |
Other income and expense : | ||
Interest revenue | 200 | |
Interest Expenses | (350) | |
Interest income (expense), net | (150) | |
Income from continuing operations before income tax | 4,050 | |
Income tax expense | 1,215 | |
Income from continuing operations | 2,835 | |
Discontinued operations: | ||
Income from operations of discontinued component (a) | 400 | |
Income tax expense (b) | 120 | |
Income on discontinued operations | 280 | |
Net income | 3,115 | |
Earnings per share: | ||
Income from continuing operations (c) | 5.67 | |
Income on discontinued operations (d) | 0.56 | |
Net income | 6.23 |
(Table 1)
Working Notes:
(1)
Calculate Income from operations of discontinued component for Company R
(2)
Calculate Income tax expenses for Company R
(3)
Calculate the EPS for Income from continuing operations
(4)
Calculate the EPS for Income on discontinued operations
Hence, the value of Net income is $3,115 and EPS is $6.23 under the multi-step statement for Company R for the year ended December 31, 2018.
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