Argent Company is a diversified corporation based in the US. The companys income statement for the year
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Question:
Argent Company is a diversified corporation based in the US. The company’s income statement for the year ended December 31, 2020, is provided.
Information:
- In 2020, the company earned Royalties and fees revenue of $1 billion from a one-time, six-month contract with the U.S. government. The company does not expect to do any further business with the U.S. government in the future.
- Cost of Goods Sold includes an expense of $500 due to a change in accounting estimate which management wants you to treat as “noise” in this analysis.
Required:
Determine Argent’s Permanent, Transitory and Value-Irrelevant earnings for the year. Take each line in the Income Statement and place it in the appropriate column. Use the definitions on pages. Be sure to include subtotals in each column just as they are calculated in the income statement. I have completed the first 2 line items.
2020 | ||||||
($ in millions) | As Presented | Permanent | Transitory | Valuation Irrelevant | ||
Revenues: | ||||||
Sales of goods | $ 54,196 | $ 54,196 | $ - | $ - | ||
Sales of services | 11,923 | 11,923 | - | - | ||
Royalties and fees | 1,629 | |||||
Total revenues | 67,748 | 66,119 | - | - | ||
Costs and expenses: | ||||||
Cost of goods sold | (24,594) | |||||
Cost of services sold | (8,425) | |||||
Restructuring (charges) reversals | 1,000 | |||||
Interest charges | (595) | |||||
Other costs and expenses | (6,274) | |||||
Litigation charges (income) | 550 | |||||
(Losses) gains on sales of investments | (75) | |||||
(Losses) gains on assets sales | 25 | |||||
Inventory write-offs | - |
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-0470239803
5th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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