Question

For the year ending December 31, 2021, Olivo Corporation had income from continuing operations before taxes...

For the year ending December 31, 2021, Olivo Corporation had income from continuing operations before taxes of $1,330,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should be considered material.

  1. In November 2021, Olivo sold its PizzaPasta restaurant chain that qualified as a component of an entity. The company had adopted a plan to sell the chain in May 2021. The income from operations of the chain from January 1, 2021, through November was $173,000 and the loss on sale of the chain’s assets was $326,000.
  2. In 2021, Olivo sold one of its six factories for $1,460,000. At the time of the sale, the factory had a book value of $1,230,000. The factory was not considered a component of the entity.
  3. In 2019, Olivo’s accountant omitted the annual adjustment for patent amortization expense of $133,000. The error was not discovered until December 2021.


Required:
Prepare Olivo’s income statement, beginning with income from continuing operations before taxes, for the year ended December 31, 2021. Assume an income tax rate of 25%. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)
  

OLIVO CORPORATION

Partial Income Statement

For the Year Ended December 31, 2021

Income from continuing operations before income taxes

Income from continuing operations

Discontinued operations:

Loss on discontinued operations

Net income

Homework Answers

Answer #1

Answer:

OLIVIO CORPORATION
Partial Income Statement
For the Year Ended December 31, 2021
Income from continuing operations before income taxes* 1560000
Income tax expense (25% x $1560000) -390000
Income from continuing operations 1170000
Discontinued operations:
Loss from operations of discontinued component** -153000
Income tax benefit (25% x $153000) 38250
Loss on discontinued operations -114750
Net income 1055250

*Income from continuing operations before income taxes = $1330000 + ($1460000 - $1230000) = $1330000 + $230000 = $1560000

**Loss from operations of discontinued component = $173000 - $326000 = $-153000

Note: The omission of the adjustment for patent amortization expense of 2019 will be adjusted to the retained earnings in 2021 and not to the income statement.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
For the year ending December 31, 2021, Olivo Corporation had income from continuing operations before taxes...
For the year ending December 31, 2021, Olivo Corporation had income from continuing operations before taxes of $1,330,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should be considered material. In November 2021, Olivo sold its PizzaPasta restaurant chain that qualified as a component of an entity. The company had adopted a plan to sell the chain in May 2021. The income from operations of the chain from January...
For the year ending December 31, 2018, Benson Corporation had income from continuing operations before taxes...
For the year ending December 31, 2018, Benson Corporation had income from continuing operations before taxes of $1,250,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should be considered material. In November 2018, Benson sold its Pancake Village restaurant chain that qualified as a component of an entity. The company had adopted a plan to sell the chain in May 2018. The income from operations of the chain from...
Hi can I get a solution for this? For the year ending December 31, 2016, Mickey...
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...
On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale...
On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $19 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $17 million. The loss from operations of the segment during 2021 was $4.8 million. Pretax income from continuing operations for the year totaled $6.8 million. The income tax rate is 25%. Please help...
Apparel Inc.'s 2021 income from continuing operations before income taxes was $298,000. Apparel Inc. reported before-tax...
Apparel Inc.'s 2021 income from continuing operations before income taxes was $298,000. Apparel Inc. reported before-tax income on discontinued operations of $74,000. All tax items are subject to a 25% tax rate. In its income statement for 2021, Apparel Inc. would show the following line-item amounts for income tax expense and net income: Multiple Choice $279,000 and $74,500 respectively. $224,000 and $279,500 respectively. $372,000 and $316,500 respectively. $74,500 and $279,000 respectively.
Brief Exercise 4-5 (Algo) Income from continuing operations [LO4-3, 4-5] The following are partial income statement...
Brief Exercise 4-5 (Algo) Income from continuing operations [LO4-3, 4-5] The following are partial income statement account balances taken from the December 31, 2021, year-end trial balance of White and Sons, Inc.: restructuring costs, $470,000; interest revenue, $57,000; before-tax loss on discontinued operations, $570,000; and loss on sale of investments, $67,000. Income tax expense has not yet been recorded. The income tax rate is 25%. Prepare the lower portion of the 2021 income statement beginning with $885,000 income from continuing...
Trayer Corporation has income from continuing operations of $430,000 for the year ended December 31, 2017....
Trayer Corporation has income from continuing operations of $430,000 for the year ended December 31, 2017. It also has the following items (before considering income taxes). 1. An unrealized loss of $85,400 on available-for-sale securities. 2. A gain of $38,600 on the discontinuance of a division (comprised of a $5,200 loss from operations and a $43,800 gain on disposal). 3. A correction of an error in last year’s financial statements that resulted in a $20,000 understatement of 2016 net income....
Esquire Comic Book Company had income before tax of $1,200,000 in 2021 before considering the following...
Esquire Comic Book Company had income before tax of $1,200,000 in 2021 before considering the following material items:    Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting principles. The before-tax loss on disposal was $360,000. The division generated before-tax income from operations from the beginning of the year through disposal of $540,000. The company incurred restructuring costs of $75,000 during the year.    Required: Prepare a 2021 income statement for...
Zeus Company reports the following for the current year: Income from continuing operations before income tax...
Zeus Company reports the following for the current year: Income from continuing operations before income tax $500,000 Loss from discontinued operations $90,000* Weighted average number of common shares outstanding 40,000 Applicable tax rate 40% *Net of any tax effect Required: 1. Prepare a partial income statement for Zeus Company beginning with income from continuing operations before income tax. Zeus Inc. Partial Income Statement For the Year Ended December 31 $ $ $ 2. Calculate the earnings per common share for...
Cendant Corporation's results for the year ended December 31, 2021, include the following material items: Sales...
Cendant Corporation's results for the year ended December 31, 2021, include the following material items: Sales revenue 6,350,000 Cost of goods sold 3,750,000 Selling and administrative expenses 1,130,000 Loss on sale of investments 193,000 Loss on discontinued operations 482,000 Loss on impairment from continuing operations 69,000 Multiple Choice: A) $726,000. B) $1,208,000. C) $1,267,700. D) $1,277,000. Cendant Corporation's income from continuing operations before income taxes for 2021 is:
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT