David Company's income statements for the year ended December 31, 2017, and December 31, 2016 and presented
Question:
Additional facts are as follows:
a. The loss from operations of the discontinued Drexler Division (a strategic component of the company) from January 1, 2017 to September 30, 2017 (the portion of the year prior to the date of sale), and from January 1, 2016 to December 31, 2016, is included in David€™s income statements for the year ended December 31, 2017 and December 31, 2016, respectively, in €œother, net.€
b. David has a simple capital structure with only common stock outstanding, and the net income per share of common stock was based on the weighted average number of common shares outstanding during each year.
c. David€™s common stock is listed on the New York Stock Exchange and closed at $ 13 per share on December 31, 2017, and $ 15 per share on December 31, 2016.
Required:
Determine from the additional facts listed whether the presentation of those facts in David€™s income statements is appropriate. If the presentation is appropriate, discuss the rationale for the presentation. If the presentation is not appropriate, specify the appropriate presentation and discuss its rationale. Do not discuss disclosure requirements for the notes to the financial statements.
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...
Step by Step Answer:
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach