Question

Cool Cruise Lines, Inc., reported the following income statement for the year ended December 31, 2014:
Millions
Operating revenues ............................................................... $ 95,500
Operating expenses ............................................................... 84,100
Operating income.................................................................. 11,400
Other revenue (expense), net ................................................. 1,000
Income from continuing operations....................................... 12,400
Discontinued operations, net of tax....................................... 1,100
Net income............................................................................ $ 13,500

Requirements
1. Were Cool Cruise Line’s discontinued operations more like an expense or revenue? How can you tell?
2. Should the discontinued operations of Cool Cruise Lines be included in or excluded from net income? State your reason.
3. Suppose you are working as a financial analyst and your job is to predict Cool Cruise Line’s net income for 2015 and beyond. Which item from the income statement will you use for your prediction? Identify its amount. Why will you use this item?



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  • CreatedJuly 25, 2014
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