Question

work 6 Saved my work mode: This shows what is correct or incorrect for the work you have completed so Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2016, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2016, at a priceſof $600,000. The book value of the division's assets was $1,000,000, resulting in a before- tax loss of $400,000 on the sale. The division incurred a before-tax operating loss from operations of $130,000 from the beginning of the year through December 15. The income tax rate is 40%. Chance's after-tax income from its continuing operations is $350,000. Required: Prepare an income statement for 2016 beginning with income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.) Answer is complete but not entirely correct. CHANCE COMPANY < Prev 5 of 10 !! Next > MacBook Pro A 780000000 ellery

Answer 1

	Chance Company
	Partial Income Statement
	For the year ended December 31, 2018
(a)	Income from continuing operations	$   3,50,000
	Discontinued operations
	Loss from operations of discontinued component	$ -5,30,000
Add:	Income tax benefits	$   2,12,000
(b)	Loss on discontinued operations	$ -3,18,000
(a) + (b)	Net Income	$      32,000
	Earnings per share
	Income from continuing operations ($350000 / 1,00,000)	$                 4
	Loss from discontinued operations ($-318000 / 1,00,000)	$         -3.18
	Net Income	$           0.32
	Workings:
	Computation of Loss from discontinuing operations:
	Loss on sale of asset	$ -4,00,000
Add:	Operating loss	$ -1,30,000
	Before tax loss from Discontinued operations	$ -5,30,000
Less:	Income tax benefits ($530,000 X 40%)	$   2,12,000
	Net of tax loss	$ -3,18,000