Century Company a diversified manufacturing company had four separate operating
Century Company, a diversified manufacturing company, had four separate operating divisions engaged in the manufacture of products in each of the following areas: food products, health aids, textiles, and office equipment. Financial data for the 2 years ended December 31, 2017, and 2016 are presented here:
On January 1, 2017, Century adopted a plan to sell the assets and product line of the office equipment division and considered it a component of the company. On September 1, 2017, the division’s assets and product line were sold for $2,100,000 cash, resulting in a gain of $640,000.
The company’s textiles division had six manufacturing plants that produced a variety of textile products. In April 2017, the company sold one of these plants and realized a gain of $130,000. After the sale, the operations at the plant that was sold were transferred to the remaining five textile plants which the company continued to operate.
In August 2017, the main warehouse of the food products division, located on the banks of the Bayer River, was flooded when the river overflowed. The resulting damage of $420,000 is not included in the financial data given previously. Historical records indicate that the Bayer River normally overflows every 4 to 5 years, causing flood damage to adjacent property.
For the 2 years ended December 31, 2017 and 2016, the company’s investments generated interest income of $70,000 and $40,000, respectively.
The provision for income tax expense for each of the 2 years should be computed at a rate of 40%.
Prepare in proper form a multiple-step comparative income statement for Century for the 2 years ended December 31, 2017, and December 31, 2016. Earnings per share information and footnotes are not required.
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