Preparing the Discontinued Operations Section of the Income Statement At its September 1, 2020, meeting, the board
Question:
a. Present the discontinued operations section of the 2020 income statement for Jolie Company. Assume that the after-tax income from continuing operations in 2020 is $500,000. Ignore the earnings per share disclosure.
- Note: Use a negative sign to indicate a loss.
- Note: If a line item is not required, leave the answer blank (zero).
2020 | |
---|---|
Income from continuing operations | |
Discontinued operations | |
Loss from discontinued operations, net of tax savings | |
Impairment loss on discontinued component, net of tax savings | |
Net Income |
b. Actual operations of the vending machine division for the first three months of 2021 result in an operating loss before taxes of $40,000, and the sale of the net assets of the division results in an actual pretax loss of $180,000. Present the discontinued operations section of comparative income statements for 2020 and 2021 for Jolie Company. Assume that after-tax income from continuing operations is $600,000 in 2021.
- Note: Use a negative sign to indicate a loss.
- Note: If a line item is not required, leave the answer blank (zero).
2021 | 2020 | |
---|---|---|
Income from continuing operations | ||
Discontinued operations | ||
Loss from discontinued operations, net of tax savings | ||
Impairment loss on discontinued component, net of tax savings | ||
Loss on disposal of discontinued component, net of tax savings | ||
Net income |
c. How would the answer change to part a if the book value of the vending machine operation were $1,900,000 on December 31, 2020, instead of $2,100,000?
- Note: Use a negative sign to indicate a loss.
- Note: If a line item is not required, leave the answer blank (zero).
2020 | |
---|---|
Income from continuing operations | |
Discontinued operations | |
Loss from discontinued operations, net of tax savings | |
Impairment gain (loss) on discontinued component, net of tax (savings) | |
Net income |
Horngrens Financial and Managerial Accounting
ISBN: 978-0133255584
4th Edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura