Question

Dos Amugus Company has income from continuing operations of $621,000 (after tax) for the year ended December 31, 2020. It also has the following items (before considering income taxes): (1) An unrealized loss of $120,000 available-for-sale-securities. (2) A gain of $60,000 on the discontinuance of a major component. (3) A cumulative effect of a change in accounting principle that resulted in an increase in prior years' depreciation of $50,000. Assume all items are subject to income taxes at a 30% tax rate. Prepare an income statement, beginning with income from continuing operations. DOS AMUGUS COMPANY Partial Statement of Comprehensive Income For the Year Ended December 31, 2020

Answer 1

Answer:

                              Dos Amugus company

              Partial Statement of Comprehensive Income

Particulars                                                                           Amount

Income from continuing operations                                $621,000

Discontinued operations. Gain on discontinued            $42,000  

segment net of tax (60,000 * 30% of 60,000)                                

Net income                                                                        $663,000

Other comprehensive income                                          ($84,000)

Unrealized holding loss, on available for sale

securities net of income tax (120,000-30%*120,000)                      

Comprehensive income                                                   $579,000