Hi can I get a solution for this?
For the year ending December 31, 2016, Mickey Mouse Corporation
had income from continuing operations before taxes of $1,500,000
before considering the following transactions and events. All the
items described below are before taxes and the amounts should be
considered material and are not included in the continuing
operations above.
- In 2016, Mickey sold one of its six manufacturing assembly
lines for $1,200,000. At the time of the sale, the assembly line
equipment had a carrying value of $1,100,000.
- In November of 2016, Mickey sold its House of Mouse restaurant
chain that qualified as a separate line of business. The company
had adopted a plan to sell the chain in May of 2016. The operating
income of the chain from January 1, 2016, through May 2016 was
$250,000. The operating income from May until November, 2016 was
$50,000 and the loss on sale of the chain’s net assets was
$200,000.
Required:
- Prepare Mickey’s income statement, beginning with income from
continuing operations before taxes, for the year ended December 31,
2016. Assume an income tax rate of 40 percent. Ignore EPS
disclosures.
- Briefly explain the motivation for segregating certain income
statement events from income from continuing operations.