Which of the following items would be included in the discontinued operations section of the income...
Which of the following items would be included in the discontinued operations section of the income statement?
A. The gain or loss on disposal of the segment.
B. Both the income or loss from operating the segment prior to its disposal, and the gain or loss on disposal of the segment.
C. Income or loss from operating the segment prior to its disposal.
D. Only losses and not gains on the disposal of a segment.
2.
All things being equal, if investors expect earnings to increase substantially from current levels, the price to earnings ratio will:
Multiple Choice
A.Be quite low.
B. Be quite high.
C. Not change.
D. Not be affected by income expectations.
3. Corona Corporation's financial statements for the current year include the following:
| Income from continuing operations | $ | 818,400 | |
| Income tax expense | $ | 125,000 | |
| Prior period adjustment (increase in prior year net income, net of taxes) | $ | 250,800 | |
| Cash dividends paid to preferred stockholders | $ | 266,640 | |
| Gain from discontinued operations (net of taxes) | $ | 541,200 | |
| Non-recurring loss | $ | 125,400 | |
On the basis of this information, net income for the current year
is:
Multiple Choice
A. $693,400
B. $1,234,600
C. $1,360,000
D. $1,108,800
Homework Answers
1. The correct answer is Option B i.e. Both the income or loss from operating the segment prior to its disposal, and the gain or loss on disposal of the segment.
2. The correct answer is Option A i.e: Be quite low
P/E ratio= Stock price per share/ Earning price per share, So if other things are constant and earning per share increases substantially. Then P/E ratio will be low.
3.The correct answer is Option B i.e $1,234,600 (818,400+541,200-125,000)
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