Question

Comprehensive Income and Discontinued Operations PROBLEMA In 2017, the Kerr-Graham Corporation had many segments to their business. Two of these are cooking utensils and herb gardens. The Corporation decided to discontinue these two segments- assume these two segments are considered "components of the business that can be clearly distinguished from the rest of the business and their sale represents a strategic shift in the business. In 2017, Kerr-Graham's operating profits totaled $2,000,000. The cooking utensils segment earned $1,500,000, and the herb gardens segment earned $500,000. On September 15, 2018, the company adopted a plan to sell the assets of the herb garden segment. In 2018, the herb garden segment incurred operating losses of $300,000 from the beginning of the year to September 15, and $90,000 from September 16 through December 31. Management expects to operate the herb garden segment for a $75,000 loss during the first half of 2019 and to sell the segment for a profit of $50,000 in mid-2019. Kerr-Graham's 2018 income from the cooking utensils segment was $1,750,000. Prior to its sale in mid-2019, the herb garden segment lost only $55,000. The actual sale was effected on May 15, 2019, at a profit of $60,000. The cooking utensils segment 2019 earnings were $2,250,000 All numbers are stated net of appropriate tax effects. That is, you can ignore tax effects for this problem. Required: Complete Kerr-Graham's partial income statement for 2019, 2018, and 2017 beginning with “income from continuing operations."

Answer 1

Answer:

Kerr-Graham's Partial Income Statement :

Particulars	2019	2018	2017
Income from the Continuing Operation	$ 2250000	$1750000	$1500000
Discontinued Operations
Profit or (Loss) from the operation	($ 55000)	($ 390000)	$ 500000
Profit or (Loss) from Disposal	$ 60000
Total Profit or (Loss) from Discontinued Operations	$ 5000	($ 390000)	$ 500000
Net Income	$ 2255000	$ 1360000	$ 2000000