4.Please answer all the tables in their entirely Analyzing Discontinued OperationsJohnson Controls International discontinued its Power Solutions business. Johnson Controls reports the following information in its 2019 annual report.For Year Ended September 30 ($ millions) 2019 2018Net income from continuing operations$1,160 $1,214Net income from discontinued operations 4,138 931Net income$5,298 $2,145a. What effect did the discontinued operations have on net income in 2019?Increase to net income by $ 4,589Was this effect significant on Johnson Controls' income statement?Significant effect on net income →b. For analysis purposes, how would we classify the discontinued operations: as an operating activity or nonoperating activity?Nonoperating activity →

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 2P

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Comprehensive: Income Statement and Retained Earnings Milwaukee Manufacturing Company presents the following partial list of account balances, after adjustments, as of December 31, 2019: The following information is also available but is not reflected in the preceding accounts: a. The company sold Division E (a major component of the company) on August 2, 2019. During 2019, Division E had incurred a pretax loss from operations of 16,000. However, because the acquiring company could vertically integrate Division E into its facilities, Milwaukee Manufacturing was able to recognize a 42,000 pretax gain on the sale. b. On January 2, 2019, without warning, a foreign country expropriated a factory of Milwaukee Manufacturing which had been operating in that country. As a result of that expropriation, the company has incurred a pretax loss of 30,000. c. The common stock was outstanding for the entire year. A cash dividend of 1.20 per share was declared and paid in 2019. d. The 2019 income tax expense totals 31,050 and consists of the following: Required: 1. As supporting documents for Requirement 2, prepare separate supporting schedules for selling expenses and for general and administrative expenses (include depreciation expense where applicable in these schedules). 2. Prepare 2019 multiple-step income statement for Milwaukee Manufacturing. 3. Prepare a 2019 retained earnings statement. 4. Next Level What was Milwaukee Manufacturings return on common equity for 2019 if its average shareholders equity during 2019 was 500,000? What is your evaluation of this return on common equity if its target for 2019 was 15%? 5. Next Level Discuss how Milwaukee Manufacturings income statement in Requirement 2 might be different if it used IFRS.
Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020. Prepare Hellers partial income statements (through gross profit) for 2019 and 2020. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
How do you figure: Income from continuing Operation and Discontinued Operation for this problem? Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): 2021 2020 Sales revenue $ 4,400,000 $ 3,500,000 Cost of goods sold 2,860,000 2,000,000 Administrative expense 800,000 675,000 Selling expense 360,000 302,000 Interest revenue 150,000 140,000 Interest expense 200,000 200,000 Loss on sale of assets of discontinued component 48,000 — On July 1, 2021, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2021, for $48,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: 1/1/2021–9/30/2021 2020 Sales revenue $ 400,000 $ 500,000 Cost…
Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): Sales revenue Cost of goods sold Administrative expense Selling expense Interest revenue Interest expense Loss on sale of assets of discontinued component 2024 2023 $5,250,000 $4,350,000 2,170,000 3,030,000 970,000 845,000 530,000 472,000 167,000 157,000 234,000 Sales revenue Cost of goods sold Administrative expense Selling expense Operating income before taxes On July 1, 2024, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2024, for $116,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: 234,000 116,000 1/1/2024-9/30/2024 $ 570,000 (375,000) (67,000) (37,000) $ 91,000 2023 $ 670,000 (422,000) (57,000) (37,000) $ 154,000 In addition to the…
Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): 2021 2020 Sales revenue $ 4,450,000 $ 3,550,000 Cost of goods sold 2,870,000 2,010,000 Administrative expense 810,000 685,000 Selling expense 370,000 312,000 Interest revenue 151,000 141,000 Interest expense 202,000 202,000 Loss on sale of assets of discontinued component 52,000 — On July 1, 2021, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2021, for $52,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: 1/1/2021–9/30/2021 2020 Sales revenue $ 410,000 $ 510,000 Cost of goods sold (295,000 ) (326,000 ) Administrative expense (51,000 ) (41,000 )…
An entity reported the following information for the year ended December 31, 2020: Sales 7,750,000 Cost of goods sold 2,400,000 Administrative expenses 700,000 Loss on sale of equipment 100,000 Sales commissions 500,000 Interest revenue 450,000 Freight out 150,000 Loss on early extinguishment of long-term debt 200,000 Doubtful accounts expense 150,000 What net amount of loss should be reported as results of discontinued operations for 2020? a. 1,500,000 b. 1,700,000 c. 1,050,000 d. 1,400,000
Income Statement, Lower Portion At the beginning of 2019, Cameron Company's retained earnings was $212,400. For 2019, Cameron has calculated its pretax income from continuing operations to be $71,600. During 2019, the following events also occurred: During July, Cameron sold Division M (a component of the company). It has determined that the pretax income from the operations of Division M during 2019 totals $46,200 and that a pretax loss of $46,800 was incurred on the sale of Division M. Cameron had 14,000 shares of common stock outstanding during all of 2019. It declared and paid a $3 per share cash dividend on this stock. Instructions: Assuming that all the pretax items are subject to a 30% income tax rate: 1. Complete the lower portion of Cameron's 2019 income statement, beginning with "Pretax Income from Continuing Operations." Round earnings per share computations to two decimal places.
Dex Lukes at December 31, 2020, the end of its first year of operations has the following details: Sales revenue P317,050 Cost of goods sold 144,760 Selling and administrative expenses 49,700 Gain on sale of plant assets 28,090 Unrealized gain on available-for-sale debt investments 9,890 Interest expense P6,250 Loss on discontinued operations P12,880 Dividends declared and paid P4,760 Compute the following: (a) Income from operations (b) Net income (C) Comprehensive income
An entity reported the following information for the year ended December 31, 2020: Sales 7,750,000 Cost of goods sold 2,400,000 Administrative expenses 700,000 Loss on sale of equipment 100,000 Sales commissions 500,000 Interest revenue 450,000 Freight out 150,000 Loss on early extinguishment of long-term debt 200,000 Doubtful accounts expense 150,000 What net amount of loss should be reported as results of discontinued operations for 2020?
Income Statement, Lower Portion At the beginning of 2019, Cameron Company's retained earnings was $239,400. For 2019, Cameron has calculated its pretax income from continuing operations to be $158,400. During 2019, the following events also occurred: 1. During July, Cameron sold Division M (a component of the company). It has determined that the pretax income from the operations of Division M during 2019 totals $46,800 and that a pretax loss of $47,600 was incurred on the sale of Division M. 2. Cameron had 28,000 shares of common stock outstanding during all of 2019. It declared and paid a $2 per share cash dividend on this stock. Required: Assuming that all the pretax items are subject to a 30% income tax rate: 1. Complete the lower portion of Cameron's 2019 income statement, beginning with "Pretax Income from Continuing Operations." Round earnings per share computations to two decimal places. CAMERON COMPANY Partial Income Statement For Year Ended December 31, 2019 Pretax income from…
Discontinued Operations Campbell Soup reported discontinued operations in its Form 10-Q for the third quarter ended April 28, 2019. The company reported that, during the third quarter, it sold its Garden Fresh Gourmet business for approximately $55 million and also signed a definitive agreement for the sale of Bolthouse Farms for $510 million and expects to close the deal before July 2019. The company disclosed the following related to these discontinued operations ($ millions). A) Which of the following best describes how Campbell Soup reported the Bolthouse transaction? i. Campbell Soup will report the Bolthouse unit as discontinued operations in the quarter in which the unit is formally sold. ii. Campbell Soup reported the Bolthouse unit as discontinued operations in the April 28, 2019, income statement even though the unit had not been formally sold by then. iii. Campbell Soup will retroactively report the Bolthouse unit as discontinued operations in the year in which the unit is…
The following information is related to Sheridan Company for 2020. Retained earnings balance, January 1, 2020 $999,600 Sales Revenue 25,500,000 Cost of goods sold 16,320,000 Interest revenue 71,400 Selling and administrative expenses 4,794,000 Write-off of goodwill 836,400 Income taxes for 2020 1,268,880 Gain on the sale of investments 112,200 Loss due to flood damage 397,800 Loss on the disposition of the wholesale division (net of tax) 448,800 Loss on operations of the wholesale division (net of tax) 91,800 Dividends declared on common stock 255,000 Dividends declared on preferred stock 81,600 Sheridan Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Sheridan sold the wholesale operations to Rogers Company. During 2020, there were 500,000 shares of common stock outstanding all year. (a1) Prepare a…

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