Exam 3: Statements of Income and Comprehensive Income

A company had 20,000 shares of common stock outstanding on January 1,2001.On October 110,000 shares of non-cumulative preferred stock were issued as a stock dividend.No cash dividends were paid or declared in 2007 and 2007 net income was $450,000.Earnings per share (rounded to nearest cent):

The financial results of a discontinued segment must be reported separately on the income statement.

In the current year,a firm has decided to dispose of a segment.Disposal will take place in the next (subsequent) year.Use the following symbols to answer this question on reporting for discontinued operations: P = income on discontinued segment from beginning of current year to date of disposal decision Q = income on discontinued segment from date of disposal decision to end of current year R = estimated loss of discontinued segment sale of assets in subsequent year to date of disposal of segment When determining the amount to disclose as the gain or loss on disposal of the segment for the current period,which of the following should be considered:

If an abandoned asset's recoverable value increases subsequent to abandonment,the asset may be written up to a maximum of the asset's original carrying value.

A company owns an operational asset acquired on January 1,2006 at a cost of $10,000.It had an estimated useful life of 5 years,no residual value,and was being depreciated on a straight-line basis.On December 31,2007,it was determined that the total useful life would be 4 years.The following adjusting entry (assuming no adjusting entries have been made) for the accounting year ended December 31,2007 should be made (rounded to the nearest dollar):

On December 31,2007,a company discovered that a tract of land (used as a parking lot),purchased for $20,000 cash on January 1,2005,was debited in full to the Office Building account.The building was being depreciated over 20 years (straight-line) with no residual value.The income tax rate was 40 percent.The 2007 correction of prior years' error (net of income tax) was a:

Interperiod income tax allocation:

A company provides residential carpet cleaning at a rate of $24 per month or $250 per year if paid one year in advance.Examination of the bank deposits revealed the following: Revenue for the year was $__________________.

Sierra Inc.committed to sell its mountaineering division for $700,000 on October 1,Year 1.The book value of the division's net assets was $800,000.The disposal date is expected to be April 1,Year 2.Year 1 income of the division to October 1,Year 1 was a $30,000 loss,and income for the remainder of the year was a $10,000 loss.Sierra estimates that the division will lose another $25,000 during the remainder of the phase-out period in Year 2.Ignoring taxes choose the correct reporting for discontinued operations in the income statement of Sierra,Inc.,for the year ended December 31,Year 1. Income (loss) from Gain (loss) from disposal Discontinued operations of discontinued operations 1 \ 0 (\ 165,000) 2 (\ 165,000) \ 0 3 (\ 30,000) (\ 135,000) 4 (\ 65,000) (\ 100,000)

Queen Corporation decided to sell its furniture business segment for $400,000,on September 1,Year 1,which is also the disposal date.The book value of the segment's net assets is $500,000 on this date.The pre-tax income for the segment for the period January 1 - September 1,Year 1,was $150,000.Assuming a tax rate of 40%,choose the correct reporting for discontinued operations in the income statement of Queen Corporation,for the year ended December 31,Year 1. Income (loss) from Gain (loss) from disposal Discontinued operations of discontinued operations 1 \ 90,000 (\ 60,000) 2 \ 150,000 (\ 100,000) 3 \ 30,000 \ 0 4 \ 0 \ 30,000

A company had 30,000 shares of common stock outstanding on January 1,2006.On March 1,the company issued an additional 18,000 shares of common stock.Net income for the year was $99,000 (no extraordinary items).The earnings per share were (round to the nearest cent):

Scents 4 Cents Ltd.made the following changes to its retained earnings account during the year: Created $40,000 of new appropriations Reversed $50,000 of previous year's appropriations Declared $30,000 of dividends to its shareholders Paid $70,000 of dividends to its shareholders Earned $30,000 after income taxes By what amount did the firm's total retained earnings change for the year?

If capital assets of a manufacturing company are sold at a gain of $820,000 less related taxes of $250,000,and the gain is not considered unusual or infrequent,the income statement for the period would disclose the effect if this sale as:

The presentation of both net income and other comprehensive income is required under both IFRS and ASPE.

A company reported the following results of its operations for 2006: Income from continuing operations was:

On May 1,2005,a company purchased prepaid insurance,covering the next three years,for $10,800.The entire amount was debited to insurance expense at that time.On January 10,2007,the error was discovered.The average income tax rate was 40 percent.The correction of prior years' error (including its tax effect) on January 10,2007,is:

The management of Small Corporation (a privately held Canadian entity) has asked you to critique its income statement for the current year.It was prepared in single-step form by an employee as shown below.List and number your criticisms of the employee's effort.Do not look for math errors or cite the arithmetic effects of reclassifying items.

A corporation had 20,000 shares of common stock outstanding from January 1,2010,through August 1,2010,on which date 10,000 additional shares were issued.If existed net income after taxes was $110,000,the calculated earnings per share (rounded to the nearest cent) would be:

Beaulieu Enterprises Inc.,decided to dispose of its men's fashions segment on March 1,Year 1 for $100,000 (book value of net assets,$80,000).The disposal date is June 1,Year 2.Income of the segment for the first two months of Year 1 was $33,000; and for the remainder of Year 1,$107,000.Estimated income for Year 2 to the disposal date is a loss of $40,000. Required: Ignoring taxes,calculate the income or loss from discontinued operations and any gain or loss from the disposal of discontinued operations on the income statement of Beaulieu,for the year ended December 31,Year 1.

Under ASPE,Assets held for sale may be current OR non-current.