Golden Corp. disposed of a business component prior to its year-end at a loss of $9,000 before
Question:
Golden Corp. disposed of a business component prior to its year-end at a loss of $9,000 before tax. The company incurred a before tax loss from the discontinued component of $36,000 during the year. The following records for Golden Corp. for the year ended December 31 exclude amounts related to the discontinued business component.
Note: Restructuring costs of the company's operations are considered unusual and infrequent
Sales revenue = | $900,000 |
Interest expense = | 20,000 |
Gain on sale of investment = | 40,000 |
Loss on sale of patent = | 6,000 |
Selling expense = | 70,000 |
Cost of goods sold = | 600,000 |
General and administrative expense = | 130,000 |
Restructuring costs | 50,000 |
Part One
Compute the following subtotals that are shown in a multiple-step income statement. Assume an income tax rate of 25%.
a. Gross Profit
b. Operating income
c. Income from continuing operations before income taxes
d. Income tax expense
e. Income from continuing operations
f. Loss from discontinued component, net of tax
g. Net income (loss)
Part Two
Assume the same information in Part One except that the sale of the discontinued component was not complete as of December 31. On December 31, the fair value of the business component was $100,000, estimated costs to sell were $14,000, and the carrying value was $120,000 .
Compute the following subtotals that are shown in a multiple-step income statement for the year ended December 31. Assume an income tax rate of 25%
a. Gross Profit
b. Operating income
c. Income from continuing operations before income taxes
d. Income tax expense
e. Income from continuing operations
f. Loss from discontinued component, net of tax
g. Net income (loss)
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen