Question

Exercise 9-2 Trayer Corporation has income from continuing operations of $290,000 for the year ended December 31, 2017. It also has the following items (before considering income taxes). 1. An unrealized loss of $80,000 on available-for-sale securities. A gain of $30,000 on the discontinuance of a division (comprised of a $10,000 loss from operations and a $40,000 gain on disposal). A correction of an error in last year's financial statements that resulted in a $20,000 understatement of 2016 net income. Assume all items are subject to income taxes at a 20% tax rate. Prepare a statement of comprehensive income, beginning with income from continuing operations. TRAYER CORPORATION Partial Statement of Comprehensive Income Click if you would like to Show Work for this question: Open Show Work

Answer 1

Ans:

BC T Corporation Statement of Comprehensive Income For the Year Ended December 31, 2017 4 Income from continuing operations 290000 5 Discontinued operations: 6 Loss from operations of discontinued division, net of tax -8000 7 Gain on sale of discontinued division, net of tax 32000 24000 8 Net income 314000 9 Unrealized loss on available-for-sale securities, net of tax -64000 10 Comprehensive income 250000

Calculations:

T Corporation Statement of Comprehensive Income For the Year Ended December 31, 2017 4 Income from continuing operations 290000 5 Discontinued operations: 6 Loss from operations of discontinued division, net of tax = 10000*(1-0.2) 7 Gain on sale of discontinued division, net of tax =40000*(1-0.2) =B6+B7 8 Net income =C4+C7 9 Unrealized loss on available-for-sale securities, net of tax =-80000* 1-0.2) 10 Comprehensive income =C8+C9