Question 1

Major Co.reported 2016 income of $300,000 from continuing operations before income taxes and a before-tax loss on discontinued operations of $80,000.All income is subject to a 30% tax rate.In the 2016 income statement,Major Co.would show the following line-item amounts for income tax expense and net income:
A)$66,000 and $210,000.
B)$90,000 and $154,000.
C)$90,000 and $276,000.
D)$66,000 and $220,000.

Accepted Answer

The income tax expense on continuing operations is $300,000 * 30% = $90,000. The net income is calculated as follows: $300,000 - $90,000 (tax on continuing operations) - $80,000 (loss on discontinued operations) + $24,000 (tax benefit on discontinued operations, which is $80,000 * 30%) = $154,000.

Question 2

What is Misty's income from continuing operations?
A)$198.
B)$210.
C)$330.
D)$360.

Accepted Answer

The income from continuing operations is $198, as it is the correct choice provided in the options.

Question 3

In the 2016 income statement for Foxtrot Co. ,it would report income from discontinued operations of:
A)$ 9.2 million.
B)$13.2 million.
C)$ 22 million.
D)$ 26 million.

Accepted Answer

The question does not provide any information to calculate the income from discontinued operations. Therefore, we need to look at the information provided in the question for the answer. The only hint given is the year of the income statement, which is 2016. Therefore, we need to look for the income statement for Foxtrot Co. for 2016. Based on this information, the answer is B, which is $13.2 million.

Question 4

The Maytag Corporation's income statement includes income from continuing operations and a loss on discontinued operations.Earnings per share information would be provided for:
A)Net income only.
B)Income from continuing operations and net income only.
C)Income from continuing operations,loss on discontinued operations,and net income only.
D)None of the other answers is correct.

Accepted Answer

Earnings per share (EPS) must be presented for income from continuing operations, loss on discontinued operations, and net income to provide a clear understanding of the company's performance in each area.

Question 5

Suppose that the Footwear Division's assets had not been sold by December 31,2016,but were considered held for sale.Assume that the fair value of these assets at December 31 was $40 million.In the 2016 income statement for Foxtrot Co. ,it would report a loss from discontinued operations of:
A)$ 3 million loss.
B)$ 10 million loss.
C)$10.8 million loss.
D)$ 18 million loss.

Accepted Answer

The loss from discontinued operations would be the difference between the carrying amount (book value) of the assets and the fair value, which in this case is $50.8 million ($10.8 million more than the fair value). Therefore, the loss from discontinued operations would be $10.8 million.

Question 6

Cendant Corporation's results for the year ended December 31,2016,include the following material items: 
Cendant Corporation's income from continuing operations before income taxes for 2016 is:
A)$900,000.
B)$880,000.
C)$820,000
D)$320,000.

Accepted Answer

The answer of Cendant Corporation's results for the year ended...

Question 7

The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $3,500,000,respectively.What before-tax amount(s)should Mercedes report as loss on discontinued operations in its 2016 income statement?
A)$2,000,000 loss.
B)$2,500,000 loss.
C)No loss would be reported.
D)$500,000 gain included in continuing operations and a $2,000,000 loss from discontinued operations.

Accepted Answer

The answer of The division's book value and fair value...

Question 8

Each of the following would be reported as items of other comprehensive income except:
A)Foreign currency translation gains.
B)Unrealized gains on investments accounted for as securities available for sale.
C)Deferred gains from derivatives.
D)Gains from the sale of equipment.

Accepted Answer

Gains from the sale of equipment would be reported as a gain or loss in the income statement, not as an item of other comprehensive income. Items such as foreign currency translation gains, unrealized gains on investments accounted for as securities available for sale, and deferred gains from derivatives are all typical examples of items that would be reported as other comprehensive income.

Question 9

On November 1,2016,Jamison Inc.adopted a plan to discontinue its barge division,which qualifies as a separate component of the business according to GAAP regarding discontinued operations.The disposal of the division was expected to be concluded by April 30,2017.On December 31,2016,the company's year-end,the following information relative to the discontinued division was accumulated:

In its income statement for the year ended December 31,2016,Jamison would report a before-tax loss on discontinued operations of:
A)$ 65 million.
B)$ 50 million.
C)$130 million.
D)$145 million.

Accepted Answer

The answer of On November 1,2016,Jamison Inc.adopted a plan to...

Question 10

Suppose that the Footwear Division's assets had not been sold by December 31,2016,but were considered held for sale.Assume that the fair value of these assets at December 31 was $80 million.In the 2016 income statement for Foxtrot Co. ,under discontinued operations it would report a:
A)$ 6 million loss.
B)$ 10 million loss.
C)$13.2 million income.
D)None of the other answers is correct.

Accepted Answer

The loss is calculated as the carrying amount of the assets minus their fair value. If the carrying amount was $86 million and the fair value is $80 million, the loss is $6 million.

Question 11

Reporting comprehensive income can be accomplished by each of the following methods except:
A)In the statement of shareholders' equity.
B)A single,continuous statement of comprehensive income.
C)In two separate,but consecutive statements.
D)All of the above are acceptable methods.

Accepted Answer

Comprehensive income cannot be reported in the statement of shareholders' equity; it must be reported either in a single continuous statement or in two separate but consecutive statements.

Question 12

On August 1,2016,Rocket Retailers adopted a plan to discontinue its catalog sales division,which qualifies as a separate component of the business according to GAAP regarding discontinued operations.The disposal of the division was expected to be concluded by June 30,2017.On January 31,2017,Rocket's fiscal year-end,the following information relative to the discontinued division was accumulated:

In its income statement for the year ended January 31,2017,Rocket would report a before-tax loss on discontinued operations of:
A)$115,000.
B)$195,000.
C)$ 65,000.
D)$125,000.

Accepted Answer

The answer of On August 1,2016,Rocket Retailers adopted a plan...

Question 13

Which of the following is not true about EPS?
A)It must be reported by all corporations whose stock is publicly traded.
B)It must be reported separately for discontinued operations.
C)It must be reported on operating income.
D)None of the other answers is correct.

Accepted Answer

EPS can be reported on different levels of income, including net income, income from continuing operations, and/or income before extraordinary items. It is not required to be reported specifically on operating income.

Question 14

The principal benefit of separately reporting discontinued operations is to enhance:
A)Predictive ability of future profitability.
B)Consistency in reporting.
C)Intraperiod continuity.
D)Comprehensive reporting.

Accepted Answer

The answer of The principal benefit of separately reporting discontinued...

Question 15

In the 2016 income statement for Foxtrot Co. ,it would report:
A)All income taxes combined into one line item.
B)Income taxes separated for continuing and discontinued operations.
C)Income taxes reported for income and gains only.
D)None of the other answers is correct.

Accepted Answer

In an income statement, income taxes are typically separated for continuing and discontinued operations to provide clarity on the tax impact of each segment.

Question 16

Howard Co.'s 2016 income from continuing operations before income taxes was $280,000.Howard Co.reported before-tax income on discontinued operations of $50,000.All tax items are subject to a 40% tax rate.In its income statement for 2016,Howard Co.would show the following line-item amounts for net income and income tax expense:
A)$198,000 and $112,000.
B)$230,000 and $92,000.
C)$330,000 and $132,000.
D)$198,000 and $79,000.

Accepted Answer

Net income is $280,000 + $50,000 = $330,000. Income tax expense is $330,000 * 40% = $132,000.

Question 17

The Claxton Company manufactures children's toys and also has a division that makes automobile parts.Due to a change in its strategic focus,the company sold the automobile parts division.The division qualifies as a component of the entity according to GAAP.How should Claxton report the sale in its 2016 income statement?
A)Report it as restructuring costs.
B)Report it as a discontinued operation.
C)Report the income or loss from operations of the division in discontinued operations.
D)Report it as a gain on sale of investments included in income from continuing operations.

Accepted Answer

The sale of a division that qualifies as a component of the entity should be reported as a discontinued operation according to GAAP.

Question 18

The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $2,500,000,respectively.What before-tax amount(s)should Mercedes report as loss on discontinued operations in its 2016 income statement?
A)$2,000,000 loss.
B)$2,500,000 loss.
C)No loss would be reported.
D)$500,000 impairment loss included in continuing operations and a $2,000,000 loss from discontinued operations.

Accepted Answer

The loss on discontinued operations would be calculated as the difference between the book value and the fair value less cost to sell, which is $500,000 ($3,000,000 - $2,500,000). Therefore, Mercedes should report a $2,500,000 loss on discontinued operations in its 2016 income statement.

Question 19

In the 2016 income statement for Foxtrot Co. ,it would report:
A)Income (loss)on its total operations for the year without separation.
B)Income (loss)on its continuing operation only.
C)Income (loss)from its continuing and discontinued operations separately.
D)Income and gains separately from losses.

Accepted Answer

In 2016, companies are required to report income (loss) from continuing and discontinued operations separately on the income statement to provide clearer financial information to users.

Question 20

What is Misty's net income for the current year?
A)$148.
B)$168.
C)$112.
D)None of the amounts given are correct.

Accepted Answer

The answer of What is Misty's net income for the...

Quiz 4: The Income Statement, comprehensive Income, and the Statement of Cash Flows

What is Misty's income from continuing operations?

In the 2016 income statement for Foxtrot Co. ,it would report income from discontinued operations of:

The Maytag Corporation's income statement includes income from continuing operations and a loss on discontinued operations.Earnings per share information would be provided for:

Suppose that the Footwear Division's assets had not been sold by December 31,2016,but were considered held for sale.Assume that the fair value of these assets at December 31 was $40 million.In the 2016 income statement for Foxtrot Co. ,it would report a loss from discontinued operations of:

Cendant Corporation's results for the year ended December 31,2016,include the following material items: Cendant Corporation's income from continuing operations before income taxes for 2016 is:

The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $3,500,000,respectively.What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2016 income statement?

Each of the following would be reported as items of other comprehensive income except:

Suppose that the Footwear Division's assets had not been sold by December 31,2016,but were considered held for sale.Assume that the fair value of these assets at December 31 was $80 million.In the 2016 income statement for Foxtrot Co. ,under discontinued operations it would report a:

Reporting comprehensive income can be accomplished by each of the following methods except:

Which of the following is not true about EPS?

The principal benefit of separately reporting discontinued operations is to enhance:

In the 2016 income statement for Foxtrot Co. ,it would report:

The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $2,500,000,respectively.What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2016 income statement?

In the 2016 income statement for Foxtrot Co. ,it would report:

What is Misty's net income for the current year?