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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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Answer: Undercapitalization

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When an entity or business is undercapitalization, in many cases they have had to take measures such as downsizing, fewer materials to create the product, or ultimately, if none of this works, having to close the business.

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3 years ago
A lawnmower assembly plant uses a variety of​ nuts, bolts,​ screws, and other fasteners in its operation. Its supplier delivers
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Answer:

<em>B. ​vendor-managed inventory. </em>

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8 0
3 years ago
Land originally purchased for $28,390 is sold for $74,057 in cash. What is the effect of the sale on the accounting equation
Elodia [21]

There is no effect on the accounting equation.

<h3>What is accounting equation?</h3>

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The above means that land is not depreciated, therefore assets decrease (-land) but also increase (+cash).

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Learn more about account equation here: brainly.com/question/24401217

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3 years ago
Consider the following simple economy that produces only three​ goods: 2009​ (Base Year) 2017 Product Quantity Price Quantity Pr
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Answer:

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