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Brums [2.3K]
3 years ago
12

Esquire Comic Book Company had income before tax of $1,700,000 in 2016 before considering the following material items: 1. Esqui

re 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
Business
1 answer:
mel-nik [20]3 years ago
5 0

Answer:

Explanation:

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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barxatty [35]

Answer:

B; it offers an expected excess return of 1.8%

Explanation:

Here are the options :

A; it offers an expected excess return of .2%A; it offers an expected excess return of 2.2%B; it offers an expected excess return of 1.8%B; it offers an expected return of 2.4%

to determine which stock is the better buy, we have to calculate the expected return of the stocks using CAPM

According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)

Stock A = 5% + 1.2(9% - 5%) = 9.8%

Stock B = 5% + 1.8(9% - 5%) = 12.20%

The next step is to determine the excess return

stated expected return - calculated expected return = excess return

Stock A's excess return = 10% - 9.8% - 0.2%

Stock B's excess return = 14 - 12.20 = 1.8%

Security B would be considered because it has a higher excess return

8 0
2 years ago
Amy and mike are going to an amusement park. they each bought ice cream, and mike got a soda. amy. y had a $10 coupon to put tow
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We have that

Cost total-------------------------$10 coupon+$30.25=$40.25

<span>ice cream costs                        $1.50*2</span>= -$3

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<span>soda cost                                   $X*1</span>= -$X

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$X= $ 1.25

a soda costs at the amusement park $ <span>1.25</span>

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Answer: See explanation

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The first year's net earnings under the accrual basis of accounting will be:

Service revenue = $29500

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2. Which basis of accounting (cash or accrual) provides more useful information for decision-makers?

It should be noted that the accrual basis of accounting gives decision makers more useful information. This is due to the fact that the decision makers will probably want to know the revenue and the expenses that were incurred for a particular period and every other necessary details.

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