Question

Esquire Comic Book Company had income before tax of $1,000,000 in 2021 before considering the following material items:
  

1. 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 $340,000. The division generated before-tax income from operations from the beginning of the year through disposal of $500,000.
2. The company incurred restructuring costs of $80,000 during the year.

Required:
Prepare a multiple-step income statement for 2021 applying generally accepted accounting principles. The income tax rate is 25%. (Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.)
  

Answer 1

Details	Amount (In $)	Amount (In $)
Income from Continuing operatons:
Income before considering additional items	1,000,000
Decrease in income due to restructuring costs	(80,000)
Income from continuing operations before tax		9,20,000
Less: Income Tax		(230,000)
Net Income from Continuing operatons		690,000
Discontinued Operations:
Income from operations of discontinued operations	500,000
Loss on disposal of assets	(3,40,000)
Income from operations of discontinued operations	1,60,000
Income Tax	(40,000)
Net Income/loss from operations of discontinued operations after tax		1,20,000
Net Income		810,000