Question

Ivanhoe Co. had sales revenue of $549,500 in 2017. Other items recorded during the year were: Cost of goods sold $325,600 Salaries and wages expense 120,500 Income tax expense 29,130 Increase in value of company reputation 17,330 Other operating expenses 11,970 Unrealized gain on value of patents 23,730 Prepare a single-step income statement for Ivanhoe for 2017. Ivanhoe has 106,900 shares of stock outstanding. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Answer:

Sales Revenue                                                       549,500

Less Cost of goods sold                                       (325,600)

Gross Profit                                                               221,900

Less Expenses

Salaries and wages expense               (120,500)                                        

Other operating expenses                     (11,970)      

Income tax expense                               (29,130)    (161600)

Net Income                                                                 60300

Explanation:

A single-step income statement

Does not give distinction to Operating Incomes and expenses and Non-operating Income and expenses. All expenses are deducted in the same category.

Unrealized gain on value of patents

Patents are Intangible Assets. The gain in Patents Is Adjasted  in Income statement subject to previous revaluations if Fair Value Model was elected by Ivnhoe Co for its subsequent measurement of Intangible assets

Increase in value of company reputation

Company Reputation is a special  Intangible Asset called Goodwill. The gain in Goodwill. Goodwill is Internally generated. Not Recognised in Ivanhoe Co unless if it is purchased.