operating considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2024, the company adopted a plan to sell the assets of the division. Consider the following: The actual sale was completed on December 15, 2024, at a price of $780,000. The book value of the division's assets was $1,370,000, resulting in a before-tax loss of $590,000 on the sale. The division Incurred a before-tax operating loss from operations of $120,000 from the beginning of the year through December 15. Chance's after-tax Income from its continuing operations is $730,000. The Income tax rate is 25%. Required: Prepare an income statement beginning with Income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. Note: Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places. Answer is complete but not entirely correct. CHANCE COMPANY Partial Income Statement For the Year Ended December 31, 2024 Income from continuing operations Discontinued operations: S 730,000 Loss from operations of discontinued component Income tax benefit Loss from operations of discontinued component (710,000) 177,500 (532.500) X Income (loss) on discontinued operations Net income (loss) Earnings per share: Income from continuing operations (1,085.000) $ (335,000) Loss from discontinued operations Net income (loss) S 7.30 (5.33) S 1.97
operating considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2024, the company adopted a plan to sell the assets of the division. Consider the following: The actual sale was completed on December 15, 2024, at a price of $780,000. The book value of the division's assets was $1,370,000, resulting in a before-tax loss of $590,000 on the sale. The division Incurred a before-tax operating loss from operations of $120,000 from the beginning of the year through December 15. Chance's after-tax Income from its continuing operations is $730,000. The Income tax rate is 25%. Required: Prepare an income statement beginning with Income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. Note: Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places. Answer is complete but not entirely correct. CHANCE COMPANY Partial Income Statement For the Year Ended December 31, 2024 Income from continuing operations Discontinued operations: S 730,000 Loss from operations of discontinued component Income tax benefit Loss from operations of discontinued component (710,000) 177,500 (532.500) X Income (loss) on discontinued operations Net income (loss) Earnings per share: Income from continuing operations (1,085.000) $ (335,000) Loss from discontinued operations Net income (loss) S 7.30 (5.33) S 1.97
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please give explanation and working notes
Transcribed Image Text:Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are
considered separate components as defined by generally accepted accounting principles. The farm equipment component had been
unprofitable, and on September 1, 2024, the company adopted a plan to sell the assets of the division.
Consider the following:
• The actual sale was completed on December 15, 2024, at a price of $780,000. The book value of the division's assets was
$1,370,000, resulting in a before-tax loss of $590,000 on the sale.
. The division Incurred a before-tax operating loss from operations of $120,000 from the beginning of the year through December
15.
⚫ Chance's after-tax income from its continuing operations is $730,000.
• The Income tax rate is 25%.
Required:
Prepare an income statement beginning with Income from continuing operations. Include appropriate EPS disclosures assuming that
100,000 shares of common stock were outstanding throughout the year.
Note: Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.
Answer is complete but not entirely correct.
CHANCE COMPANY
Partial Income Statement
For the Year Ended December 31, 2024
Income from continuing operations
Discontinued operations:
S
730,000
Loss from operations of discontinued component
Income tax benefit
Loss from operations of discontinued component
Income (loss) on discontinued operations
Net income (loss)
Earnings per share:
Income from continuing operations
Loss from discontinued operations
Net income (loss)
(710.000)
177,500
(532,500)
(1,065,000)
$ (335,000)
S
7.30
(5.33)
S
1.97
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