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4 January, 04:33

Esquire Comic Book Company had income before tax of $1,700,000 in 2016 before considering the following material items: 1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting principles. The before-tax loss on disposal was $420,000. The division generated before-tax income from operations from the beginning of the year through disposal of $640,000. Neither the loss on disposal nor the operating income is included in the $1,700,000 before-tax income the company generated from its other divisions. 2. The company incurred restructuring costs of $75,000 during the year. Required: Prepare a 2016 income statement for Esquire beginning with income from continuing operations. Assume an income tax rate of 40%. Ig

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  1. 4 January, 05:32
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    Partial income statement

    For the Year Ended December 31, 2016

    Income from continuing operations $975,000

    Discontinued operations gain (loss):

    Income from operations of discontinued component $220,000

    Income tax expense ($88,000)

    Income on discontinued operations $132,000

    Net income $1,107,000

    Income from operations of discontinued component (including loss on disposal of $420,000) = $220,000

    Income from continuing operations:

    Income before considering additional items $1,700,000

    Decrease in income due to restructuring costs ($75,000)

    Before-tax income from continuing operations $1,625,000

    Income tax expense (40%) ($650,000)

    Income from continuing operations $975,000
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