Question

The following is Beta Industries income statement:

Net sales $19,207

Cost of products sold 5,928

Marketing, selling and administrative 5,106

Advertising and product promotion 1,476

Research and development 2,746

Provision for restructuring, net 32

Litigation settlement, net 269

Gain on disposal of assets (569)

Equity in net income of unconsolidated affiliates (334)

Interest expense, net 37

Total expenses 14,691

Earnings before income taxes 4,516

Provision for income taxes 932

Net earnings $ 3,584

Notes: • Equity in income of unconsolidated affiliates refers to income Beta Industries has earned on investments made for strategic purposes.

Which of the following components would you not consider operating?

Question 7 options:

	Equity in net income of affiliates
	Gain on disposal of assets
	Interest expense
	Research and development

Answer 1

Beta Industries income statement Net sales Less: Cost of products sold Less: Marketing, selling and administrative Less: Advertising and product promotion Less: Research and development Less: Provision for restructuring Less: Litigation settlement Add: Gain on disposal of assets 19,207 5,928 13,279 5,106 8,173 1,476 6,697 2,746 3,951 32 3,919 269 3,650 569 4,219 334) 4,553 37 4,516 14,691 -10,175 4,516 -5,659 932 -4,727 3,584 -1,143 Add: Equity in net income of unconsolidated affiliates Less: Interest expense Less : Total expenses Add: Earnings before income taxes Add: Provision for income taxes Net earnings Net Loss