he Whiting Company had two distinct operating divisions, each of which qualifies
ID: 2418793 • Letter: H
Question
he Whiting Company had two distinct operating divisions, each of which qualifies as a separate component. The shoe division had been unprofitable, and on July 1, 2015, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2015, at a price of $1,500,000. The sale resulted in a before-tax gain of $400,000
The division incurred before-tax operating losses of $280,000 from the beginning of the year through December 15. The income tax rate is 30%. Whiting’s after-tax income from its continuing operations is $800,000.
Required:
Prepare an income statement for 2015 beginning with “income from continuing operations.” Include appropriate EPS disclosures assuming 100,000 shares of common stock were outstanding throughout the year
Explanation / Answer
Statement of Income from Continuing Operation Gain on sale of Division 400000 Loss incurred before sale -280000 Gain from whiting continuing operation (After Tax) 800000 Gain from whiting continuing operation (Before Tax) 1142857.143 TOTAL TAXABLE INCOME 1262857.143 Less: Tax Expense 378857.1429 INCOME AFTER TAX 884000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.