Worldwide Corporation reported the following income statement for 2005.

Required
Answer each of the following questions.
A. For 2005, calculate the gross profit on product sales and on service sales. Why are these shown separately?
B. What is a €œprovision for restructuring€? What is a €œdiscontinued segment€? Why is it that the restructuring provision is part of operating income, but the discontinued segment is not?
C. Some businesses show interest expense in a separate section with a title like €œOther Revenues and Expenses,€ below Income from Operations. Would Worldwide€™s operating income have been positive in the years presented if it did not include interest expense?
D. Why is €œincome taxes€ a positive number, not an expense?
E. What is a €œcumulative effect of change in accounting principle€?
F. Which would be of more use in attempting to predict the financial future of the company: income from continuing operations or the final net income numbers, including the discontinued operations and the effect of the change in accounting principle?
G. Why are the effects of the discontinued segment and the change in accounting principle presented net of any taxeffect?

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(In millions) 2005 20042003 Product sales Service sales $3,355 $3,298 $3,236 2.941 2.591 2,543 8 Sales of products and services Cost of products sold Cost of services sold 6,296 5,889 (2,549) (2,523) (2,508) 1.931) (1.754) 1.743) (4,480) (4,277) (4,251) (86) (23) (249) (1,686) (1,184) 1,313) 149 (288) 154) (233)(134) (165 Costs of products and services sold Marketing, administration, and general expenses Other income and expenses, net Interest expense Loss from continuing operations before income taxes and minority interest in income of consolidated subsidiaries (40) 17) (353) 116 Income taxes Minority interest in income of consolidated subsidiaries Loss from continuing operations Discontinued operations, net of income taxes: 13 (44 13) Income from operations Estimated loss on disposal of discontinued operations Income (loss) from discontinued operations Income (loss 135 ) before cumulative effect of change in 15 77 270) Cumulative effect of change in accounting principle Postemployment benefits $1577$(326)