2018 and 2017: 31, Operating component of an entity as defined by GAAP The asset
ID: 2539234 • Letter: 2
Question
2018 and 2017: 31, Operating component of an entity as defined by GAAP The assets was The divislon's c Assume an income tax rate of 20%. effect on a separate line) operations before income taxes. Ignore EPS disclosures 2. Assume that by s assets on December 31 was $5.570.000 Prepare revised income statements according to generany accepted accounting beginning wth income from continuing operations pefore income taxes ignore EPS disclosures on December 31 was $4 090.000. Prepare revised income statements accoraing to generally accepted accounting Next >Explanation / Answer
1
Prepare revised income statement according to generally accepted principles
beginning with income from continuing operations before income taxes
JACKSON HOLDING COMPANY
Comparative Income statement
For the years ended December 31
2018
2017
Income from continuing operations before income tax
3285000
1585000
Income tax expense at 20%
-657000
-317000
Income from continuing operations
2628000
1268000
Discontinued operations gain (loss)
Income/loss from operations of discontinued component
295000
-395000
Income tax expense
-59000
79000
Income/ loss on discontinued operations
354000
-316000
Net income
2982000
952000
Notes
2018
2017
Income from continuing operations before income tax: Unadjusted
2790000
1190000
Add: Loss from discontinued operations
495000
395000
3285000
1585000
Income/loss from discontinued operations
2018
2017
Loss from operations
-495000
-395000
Gain on disposal
790000
Total
295000
-395000
2
Fair value of divison assets on december 31 was 5570000
JACKSON HOLDING COMPANY
Comparative Income statement
For the years ended December 31
2018
2017
Income from continuing operations before income tax
3285000
1585000
Income tax expense at 20%
-657000
-317000
Income from continuing operations
2628000
1268000
Discontinued operations gain (loss)
Income/loss from operations of discontinued component
-495000
-395000
Income tax expense
99000
79000
Income/ loss on discontinued operations
-396000
-316000
Net income
2232000
952000
In 2018 income for discontinued operation would include only 495000 since no impairment loss is indicated (5570000-4780000)
3
Fair value of division assets on December 31 was 4090000
2018
2017
Income from continuing operations before income tax
3285000
1585000
Income tax expense at 20%
-657000
-317000
Income from continuing operations
2628000
1268000
Discontinued operations gain (loss)
Income/loss from operations of discontinued component
-1185000
-395000
Income tax expense
237000
79000
Income/ loss on discontinued operations
-948000
-316000
Net income
1680000
952000
Income/loss from discontinued operations
2018
2017
Loss from operations
-495000
-395000
Impairment loss (4780000-4090000)
-690000
Total
-1185000
-395000
1
Prepare revised income statement according to generally accepted principles
beginning with income from continuing operations before income taxes
JACKSON HOLDING COMPANY
Comparative Income statement
For the years ended December 31
2018
2017
Income from continuing operations before income tax
3285000
1585000
Income tax expense at 20%
-657000
-317000
Income from continuing operations
2628000
1268000
Discontinued operations gain (loss)
Income/loss from operations of discontinued component
295000
-395000
Income tax expense
-59000
79000
Income/ loss on discontinued operations
354000
-316000
Net income
2982000
952000
Notes
2018
2017
Income from continuing operations before income tax: Unadjusted
2790000
1190000
Add: Loss from discontinued operations
495000
395000
3285000
1585000
Income/loss from discontinued operations
2018
2017
Loss from operations
-495000
-395000
Gain on disposal
790000
Total
295000
-395000
2
Fair value of divison assets on december 31 was 5570000
JACKSON HOLDING COMPANY
Comparative Income statement
For the years ended December 31
2018
2017
Income from continuing operations before income tax
3285000
1585000
Income tax expense at 20%
-657000
-317000
Income from continuing operations
2628000
1268000
Discontinued operations gain (loss)
Income/loss from operations of discontinued component
-495000
-395000
Income tax expense
99000
79000
Income/ loss on discontinued operations
-396000
-316000
Net income
2232000
952000
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