Question

The following information pertains to Inglewood Ltd. for the 2015 fiscal year ending December 31: Gain...

The following information pertains to Inglewood Ltd. for the 2015 fiscal year ending December 31: Gain on sale of held-for-trading investments (before tax): $ 1,500 Loss from operation of discontinued division (net of tax) 2,500 Loss from disposal of discontinued division (net of tax) 3,500 Income from operations (before tax) 125,000 Unrealized holding gain of Available-for-sale investments (net of tax) 12,000 The company tax rate is 27%. The unrealized holding gain from Available-for-sale investments relates to investments that are not quoted in an active market and the gain has been recorded to other comprehensive income (OCI). Required: a. Calculate income from continuing operations, net income, other comprehensive income, and total comprehensive income. b. How would your answers change in part (a) if the company followed ASPE?

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Answer #1

a. Income from continuing operations = Income from operations (before tax) + Gain on sale of held-for-trading investments (before tax) - Income tax on income from continuing operations = 125,000 + 1500 - ( 125000+1500)*27% = 92345

Net Income = Income from continuing operations - Loss from disposal of discontinued division (net of tax) - Loss from operation of discontinued division (net of tax)

= 92345 - 2500 -3500

= 86345

other comprehensive income = Unrealized holding gain of Available-for-sale investments (net of tax) = 12000

total comprehensive income = Net Income + other comprehensive income = 86345+ 12000 = 98345

b. Under ASPE,other comprehensive income and comprehensive income are not applied.

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