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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Income statement and earnings per share for discontinued operations

Apex Inc. reports the following for a recent year:

Income from continuing operations before income tax $1,000,000
Loss from discontinued operations $240,000*
Weighted average number of shares outstanding 20,000
Applicable tax rate 40%
*Net of any tax effect  
  1. a. Prepare a partial income .statement for Apex Inc., beginning with income from continuing operations before income tax.
  2. b. Determine the earnings per common share for Apex Inc., including per-share amounts for unusual items.

(a)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To prepare:  A partial income statement for A inc. beginning with income from continuing operations before income tax.

Explanation

Income from continuing operations are determined by deducting income from continuing operations before income tax and income tax expense.

Next, deduct loss on discontinued operations from income from continuing operations to determine net income.

Working notes to determine income tax expense is as below:

Income tax expense = (Income from 

(b)

To determine
the earnings per common share for A inc.

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