Intermediate Accounting: Reporting and Analysis
2nd Edition
ISBN: 9781285453828
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 5C
Nonrecurring Items
Lynn Company sells a component of its business in the middle of the year. On the date of sale, the net proceeds received were less than the aggregate book value of the component’s net assets. The component was operating at a loss from the beginning of the year.
In addition, Lynn had one of its manufacturing plants destroyed by an earthquake during the year. Earthquakes are not uncommon in Lynn’s operating environment.
Required:
- 1. Explain how Lynn should report discontinued operations of a component of its business on its income statement for this year. Do not discuss earnings per share requirements.
- 2. Explain how Lynn should report the loss from the earthquake on its income statement for this year. Do not discuss earnings per share requirements.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Subject: accounting
34.
Subject : - Accounting
In 20X4, Fredup Inc. purchased a piece of equipment for $21,000. The equipment has a 7-year useful life and no residual value. The equipment was erroneously included as an expense in the year. The error was discovered in December 20X8.
Required: Prepare the journal entry to record the adjustment in December 20X8. (Assume the company uses straight line depreciation, ignore taxes.)
Please proper answer please without plagiarism
Chapter 5 Solutions
Intermediate Accounting: Reporting and Analysis
Ch. 5 - In general, how does the income statement help...Ch. 5 - Prob. 2GICh. 5 - Define income under the capital maintenance...Ch. 5 - Prob. 4GICh. 5 - What is net income?Ch. 5 - What three things must a company determine to...Ch. 5 - Prob. 7GICh. 5 - Prob. 8GICh. 5 - Prob. 9GICh. 5 - Give an example and explanation for each of the...
Ch. 5 - Define expenses. What do expenses measure?Ch. 5 - Prob. 12GICh. 5 - Define gains and losses. Give examples of three...Ch. 5 - Prob. 14GICh. 5 - What items are included in a companys income from...Ch. 5 - How are unusual or infrequent gains or losses...Ch. 5 - What is interperiod tax allocation?Ch. 5 - Prob. 18GICh. 5 - Prob. 19GICh. 5 - Prob. 20GICh. 5 - Prob. 21GICh. 5 - Prob. 22GICh. 5 - Prob. 23GICh. 5 - Prob. 24GICh. 5 - Prob. 25GICh. 5 - Prob. 26GICh. 5 - Prob. 27GICh. 5 - Prob. 28GICh. 5 - Prob. 29GICh. 5 - Prob. 30GICh. 5 - Prob. 31GICh. 5 - Prob. 32GICh. 5 - What is the rate of return on common equity? What...Ch. 5 - Prob. 34GICh. 5 - Prob. 35GICh. 5 - Which of the following is expensed under the...Ch. 5 - The following information is available for Cooke...Ch. 5 - The following information is available for Wagner...Ch. 5 - Prob. 4MCCh. 5 - A loss from the sale of a component of a business...Ch. 5 - In a statement of cash flows, receipts from sales...Ch. 5 - Brandt Corporation had sales revenue of 500,000...Ch. 5 - Refer to RE5-1. Prepare a single-step income...Ch. 5 - Shaquille Corporation began the current year with...Ch. 5 - Dorno Corporation incurred expenses during the...Ch. 5 - Niler Corporation reported the following after-tax...Ch. 5 - Jordan Corporation reported retained earnings of...Ch. 5 - Prob. 7RECh. 5 - Prob. 8RECh. 5 - Amelias Bookstore reported net income of 62,000...Ch. 5 - Prob. 10RECh. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Prob. 3ECh. 5 - Cost of Goods Sold and Income Statement Schuch...Ch. 5 - Prob. 5ECh. 5 - Prob. 6ECh. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Prob. 10ECh. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Classifications Where would each of the following...Ch. 5 - Prob. 19ECh. 5 - Common-Size Analyses Meagley Company presents the...Ch. 5 - Prob. 21ECh. 5 - Prob. 22ECh. 5 - Prob. 23ECh. 5 - Prob. 24ECh. 5 - Prob. 25ECh. 5 - Prob. 26ECh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Financial Statement Violations of U.S. GAAP The...Ch. 5 - Rox Corporations multiple-step income statement...Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - The following is an alphabetical list of accounts...Ch. 5 - Financial Statement Deficiencies The following is...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 1CCh. 5 - Prob. 2CCh. 5 - Prob. 3CCh. 5 - Prob. 4CCh. 5 - Nonrecurring Items Lynn Company sells a component...Ch. 5 - Prob. 6CCh. 5 - Accrual Accounting GAAP requires the use of...Ch. 5 - Prob. 8CCh. 5 - Prob. 9CCh. 5 - Prob. 10CCh. 5 - Prob. 12C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800arrow_forwardConsider the following situations and determine (1) which type of liability should be recognized (specific account), and (2) how much should be recognized in the current period (year). A. A business depreciates a building with a book value of $12,000, using straight-line depreciation, no salvage value, and a remaining useful life of six years. B. An organization has a line of credit with a supplier. The company purchases $35,500 worth of inventory on credit. Terms of purchase are 3/20, n/60. C. An employee earns $1,000 in pay and the employer withholds $46 for federal income tax. D. A customer pays $4,000 in advance for legal services. The lawyer has previously recognized 30% of the services as revenue. The remainder is outstanding.arrow_forwardConsider the following situations and determine (1) which type of liability should be recognized (specific account), and (2) how much should be recognized in the current period (year). A business depreciates a building with a book value of $12,000, using straight-line depreciation, no salvage value, and a remaining useful life of six years. An organization has a line of credit with a supplier. The company purchases $35,500 worth of inventory on credit. Terms of purchase are 3/20, n/60. An employee earns $1,000 in pay and the employer withholds $46 for federal income tax. A customer pays $4,000 in advance for legal services. The lawyer has previously recognized 30% of the services as revenue. The remainder is outstanding.arrow_forward
- Please do not provide answer in image format thank youarrow_forwardRequested in Accountarrow_forwardFor each of the following subsequent events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose.1. Settlement of a tax case at a cost considerably in excess of the amount expected at year-end.2. Introduction of a new product line.3. Loss of assembly plant due to fire.4. Sale of a significant portion of the company’s assets.5. Retirement of the company president.6. Issuance of a significant number of ordinary shares.7. Loss of a significant customer.8. Prolonged employee strike.9. Material loss on a year-end receivable because of a customer’s bankruptcy.10. Hiring of a new president.11. Settlement of prior year’s litigation against the company (no loss was accrued).12. Merger with another company of comparable size.arrow_forward
- Do not give answer in imagearrow_forwardStatement 1: When change in the estimated life of depreciable asset occurs at the time of an intercompany sale, the treatment is different than if the change occurred while the asset remained on the books of the selling affiliate. Statement 2: The branch reports ending inventory of $1,500 consisting of goods from the home office billed at 125% above cost. The related "allowance" account in the home office books must have a credit balance of $300. Statement 3: In the financial settlement of a contingent consideration classified as financial liability, the amount shall be remeasured at fair value with any gain or loss included in a profit or loss. Statement 4: Intercompany sales of inventory necessitate adjustments to the calculation of the distribution of income to the controlling interests. Which statement/s is/are true?arrow_forwardThe Laura Company has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed. a. In 2020, fully depreciated equipment (with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment. b. On January 1, 2019, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. (Ignore depreciation.) Required: Prepare journal entries to correct these errors at December 31, 2020. Ignore income taxes.arrow_forward
- A company uses the revaluation method to account for its equipment. On 1 January 20X4, the company purchased a new machine for $56,000. The equipment has a four-year useful life, and no residual value. The company uses straight-line depreciation, and there are no significant components. At the end of the first year, the fair value of the equipment is $39,000. Required: 1. Prepare the journal entry to record the purchase. 2. Prepare the year end adjusting entry using the elimination method. 3. Prepare the year end adjusting entry using the proportionate method.arrow_forwardPlease prepare journal entriesarrow_forwardAs a standard practice, the company does not recognize a provision for a guarantee of good operation of the products sold. Based on past statistics, the cost of repairing damage of products sold in the fiscal year amounts to € 500 while the cost of repairing damaged products sold in previous years amounts to € 600. If the balance sheet net worth is 5000, what will be the actual net worth at the end of the fiscal year?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENTPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
IAS 10 Events After the Reporting Period; Author: Silvia of CPDbox;https://www.youtube.com/watch?v=ijYZlb1_ZyQ;License: Standard Youtube License