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Question 3.4 (Total: 18 marks) Lunar Eclipse Inc. follows IFRS and has the following amounts for...

Question 3.4 (Total: 18 marks)

Lunar Eclipse Inc. follows IFRS and has the following amounts for the year ended December 31, 2020: gain on sale of FV-NI investments (before tax), $15,000; loss from operation of discontinued division (net of tax), $42,000; income from operations (before tax), $220,000; unrealized holding gain-OCI (net of tax), $12,000; income tax on income from continuing operations, $63,000; loss from disposal of discontinued division (net of tax), $75,000. The unrealized holding gain-OCI relates to investments that are not quoted in an active market.

Required

1. Calculate income from continuing operations.

2. Calculate net income.   

3. Calculate other comprehensive income.   

4. Calculate comprehensive income.

5. How would your Solutions to parts (1) to (4) be different if Lunar Eclipse followed ASPE?
Business   Accounting   
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Answer #1

Lunar Eclipse

Income statement for the year ended Dec 31,20xx

Amt. in $

Net Income

1

Income from Continuing business operations

$222,000.00

Less: Income tax on continuing operations

($63,000.00)

$159,000.00

b

Loss from discontinuing operations

($42,000.00)

Gain on sale of Investments

$15,000.00

Loss from sale of discontinued operations

($75,000.00)

2

Net Income

$57,000.00

Comprehensive Income statement

Net Income

$57,000.00

3

Othe Comprehensive Income

Un realised holding gain - OCI

$12,000.00

4

Comprehensive Income

$69,000.00

5. Under ASPE, other comprehensive income and comprehensive income do not apply, and investments that are not quoted in an active market are accounted for at cost.

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