Chapter 4 Part I i 3 Esquire Comic Book Company had income before tax of $1,900,

Question

Chapter 4 Part I i 3 Esquire Comic Book Company had income before tax of $1,900,000 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 $440,000. The division generated before-tax income from operations from the beginning of the year through disposal of $680,000. Neither the loss on disposal nor the operating income is included in the $1,900,000 before-tax income points the company generated from its other divisions 2. The company incurred restructuring costs of $95,000 during the year Required: Print References Prepare a 2016 income statement for Esquire beginning with income from continuing rations. Assume an income tax rate of 40%. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.) ESQUIRE COMIC BOOK COMPANY Partial Income Statement For the Year Ended December 31, 2016 Dis operations gain (loss) Next >

Explanation / Answer

ESQUIRE COMIC BOOK COMPANY Income Statement For the Year Ended December 31, 2016 Income from continuing operations * $570,000.00 Discontinued operations: Income from operations of discontinued component ($680,000 - $440,000) $240,000.00 Income tax expense @ 40% -$96,000.00 Income on discontinued operations $144,000.00 Net Income $714,000.00 * Income from continuing operations: Income before considering additional items               $1,900,000.00 Decrease in income due to restructuring costs                   -$950,000.00 Before-tax income from continuing operations                 $950,000.00 Income tax expense (40%)                -$380,000.00 Income from continuing operations             $570,000.00

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