Question

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2021 ($ in thousands): sales revenue, $18,300; cost of goods sold, $7700; selling expenses, $1,450, general and administrative expenses $950; interest revenue, $230; interest expense, $320. Income taxes have not yet been recorded. The company's income tax rate is 25% on all items of income or loss. These revenue and expense items appear in the company's income statement every year. The company's controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021 ($ in thousands). All transactions are material in amount. 1. Investments were sold during the year at a loss of $370. Schembri also had an unrealized gain of $460 for the year on investments in debt securities that qualify as components of comprehensive income. 2. One of the company's factories was closed during the year. Restructuring costs incurred were $1,800. 3. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $720 in 2021 prior to the sale, and its assets were sold at a gain of $1,700. 4. In 2021, the company's accountant discovered that depreciation expense in 2020 for the office building was understated by $350. 5. Negative foreign currency translation adjustment for the year totaled $420, Required: < Prey 14 of 15 Next > P OPENG > a N 0 Х hop

Answer 1

1)
	Statement of comprehensive income	(in thousands)
	For the year ended December 31,2021
	Particular	Amount($)	Amount($)	Working
	Sales revenue		18300
	Cost of goods sold		7700
	Gross profit		10600
	Operating expenses:-
	Selling expenses	1450
	General and administrative expenses	950
	Restructing cost	1800
	Total operating expenses		4200
	Operating income		6400
	Other income (expenses):-
	Loss on sale of investment	-370
	Interest expenses	-320
	Interest revenue	230
	Other income (expenses)		-460
	Income from continue operation before income tax		5940
	Income tax expenses (25%)		1485
	Income from continuing operations		4455
	Discontinued operation :-
	Income from operation of discontinued component	980		(1700-720)
	Income tax expenses	-245
	Income from discontinued operation		735
	Net income		5190
	Other comprehensive income (loss)
	Unrealized gain from investment,net of tax	345		[460(1-25%)]
	Loss from foreign currency translation , net of tax	-315		[420(1-25%)]
	Total other comprehensive income		30
	Comprehensive income		5220
	Earning per share :-
	Income from continuing operation	4.05
	Income from discontinued operation	0.66
	Net income	4.71
Note :	weighted average share
	,= 1000000 + (200000/2) = 1100000
	Net income from continue operation
	,=4455/1100 = 4.05
	Net income from discontinue operation
	,=735/1100 = 0.66

2)	Statement of comprehensive income	( in thousands )
	For the year ended December 31,2021
	Particular	Amount($)	Amount($)	working
	Net income		5190
	Other comprehensive income (loss)
	Unrealized gain from investment ,net of tax	345		[460(1-25%)]
	Loss from foreign currency translation,net of tax	-315		[420(1-25%)]
	Total other comprehensive income		30
	Comprehensive income		5220