3rd Edition

ISBN: 9780136912644

Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella

Publisher: Pearson Education (US)

Concept explainers

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Textbook Question

Chapter 5, Problem 5.8P

Statement of Comprehensive Income Single-and Two-Statement Approaches. Tortarella Timber Company provided the following information for the current year

1. Operating income amounted to $345,000
2. The company sold investments in bonds at a pre-tax loss of $23,500
3. Tortarella reported a $5,600 unrealized loss on an available-for-sale portfolio that is included in other comprehensive income.
4. The company reported a $12,000 unrealized gam on its trading portfolio, which is included in net income
5. Tortarella committed to discontinue its retail lumber stores division on January 1 of the current year The retail lumber stores meet the criteria to be presented as a discontinued operation The retail lumber stores accounted for 15% of the company’s operating income. The stores were operated all year.
6. The retail lumber stores division was sold at December 31 of the current year for a $16,850 pre-tax loss. There was no gain or loss on remeasurement on January 1.

The company is subject to a 30% income tax rate.

Required

a. Prepare a single statement of comprehensive income beginning with operating income.
b. Prepare separate statements of net income and comprehensive income.

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Chapter 5, Problem 5.7P

Chapter 5, Problem 5.9P

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Solution Summary: The author explains that comprehensive income is the income of a company which is calculated by adjusting all unrealized losses and gains from the net income.

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