For its fiscal year ending October 31, 2014, Douglas Corporation reports the following partial data shown below.
Question:
For its fiscal year ending October 31, 2014, Douglas Corporation reports the following partial data shown below.
Income before income taxes £550,000
Income tax expense (30% 3 £400,000) 120,000
Income before discontinued operations 430,000
Loss on discontinued division 150,000
Net income £280,000
The loss on discontinued division consists of £60,000 loss from operations of the division and £90,000 loss on disposal of the division. The income tax rate is 30% on all items.
Instructions
(a) Prepare a correct income statement, beginning with income before income taxes.
(b) Explain in memo form why the income statement data are misleading.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Financial Accounting IFRS
ISBN: 978-1118285909
2nd edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso