Question

Problem 2 The Jaha Corporation operates 6 business segments. The board of directors of the corporation made the decision to formally dispose of one of these segments on October 1, 20x4. The segment was put up for sale on this date and negotiations with potential buyers are still ongoing as at December 31, 20x4. The income statement of Jaha for the year ended December 31, 20x4 is as follows. Note that the financial results include the results of the segment that is held for sale. Revenues Cost of goods sold Operating expenses Depreciation Income tax expense Net income $12,560,000 (6,000,000) (2,500,000) (1,200,000) (1,001,000) $1,859,000 The operating results of the segment held for sale are as follows: Revenues Cost of goods sold Operating expenses Depreciation Operating income $ 2,450,000 (1,100,000) (600,000) (300,000) S450,000 Depreciation was incurred evenly throughout the whole year. Data on the assets of the segment are as follows: Carrying value Fair value Costs to sell $3,200,000 2,500,000 10% of fair value Required - Assuming that Jaha is a publicly accountable entity, reconstruct the income statement of the company for the year ended December 31, 20x4. The firm's tax rate is 35%.

Answer 1

Income Statement of the Jaha Company is attached under below

Income Statement for year Pended 31) Dec/28x4 Particulars Whole Company Segment held boz hale Revenue $1,2 560.000 $24,50,000 - COGS $6 000 000 (-) operating Expense $ 25,00,000 $ 9,00,000 1-) Depreciation $ 29,50,000 $ 11,00, COU $ 6,00,000 - 22,50,000 - 12,00,000 -3,00,000 ] (-) Loss on sale of Division f) Income Tax Expense $ 3,18,500 (15,00,000) $ 5,25,000