Question

Marigold Corporation had income from continuing operations of $10,634,000 in 2020. During 2020, it disposed of its restaurant division at an after-tax loss of $206,700. Prior to disposal, the division operated at a loss of $320,700 (net of tax) in 2020 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Marigold had 10,000,000 shares of common stock outstanding during 2020. Prepare a partial income statement for Marigold beginning with income from continuing operations.

Answer 1

Answer:

                        MARIGOLD CORPORATION

                         Income Statement (Partial)

                  For the year ended December 31, 2020  

Income from continuing operation                                   $10,634,000

Discontinued operations  

Loss from operation of discontinued         $320,700  

restaurant division(net of tax)  

Loss from disposal of restaurant division   $206,700     $527,400

(net of tax)

Net Income                                                                         $10,106,600

Earnings per share

Income from discontinuing operations  A  1.06

[10,634,000/10,000,000]

Loss from discontinued operations  B        0.05

[527,400/10,000,000]

Net Income A/B                                             1.01