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 $18.900: cost of goods sold, $8,000: selling expenses. $1.480: general and administrative expenses. $980: Interest revenue, $240; Interest expense, $200. Income taxes have not yet been recorded. The company's Income tax rate is 25% on all items of Income or loss. These revenue and expense items appear in the company's Income statement every year. The company's controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021($ in thousands). All transactions are material in amount 1. Investments were sold during the year at a loss of $400. Schembri also had an unrealized gain of $560 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 $2,100. 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 $740 in 2021 prior to the sale, and its assets were sold at a gain of $1,760. 4. In 2021, the company's accountant discovered that depreciation expense In 2020 for the office building was understated by $380. 5. Negative foreign currency translation adjustment for the year totaled S420. Required: 1. Prepare Schembri's single, continuous multiple-step statement of comprehensive income for 2021, Including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 400.000 shares were issued on July 1, 2021. 2. Prepare a separate statement of comprehensive income for 2021.

Answer 1

$ in 000s 18,900 -8,000 10,900 -1,480 -980 -380 -2.100 -4,940 5,960 Statement of comprehensive income Sales revenue Less: Cost of goods sold Gross profit Operating expenses Selling expenses General and administrative expenses Understatement of depreciation expense for office building Restructuring costs Total operating expenses Operating income Other income (expense): Loss on sale of investments Interest expense Interest revenue Other income (net) Income from continuing operations before income tax Income taxes @ 25% Income from continuing operations Discontinued operations: Loss from operations, including gain on sale of assets of division (-740+1,760) Less: Income taxes Income on discontinued operations Net income -400 -200 240 -360 5,600 -1,400 4,200 1,020 -255 765 4,965 CS Scanned with CamScanner

420 -525 -105 4,860 Other comprehensive income, net of tax Unrealized gains (losses) on securities during the period [(560-(560*25%)] Foreign currency translation adjustment (-420-(25%+420)] Comprehensive income Earnings per share Continuing operations (-4,200/1,200) Discontinued operations (765/1,200) Net income 3.50 0.64 4.14 Workings- *Earnings per share (EPS) is calculated as follows- Continuing op. = Income from continuing operations/Weighted average common shares outstanding Discontinued op. = Income from discontinued operations/Weighted average common shares outstanding Weighted average common shares outstanding = 1,000,000 + (400,000*6/12) = 1,200,000 4,965 Statement of comprehensive income Net income Other comprehensive income, net of tax Unrealized gains (losses) on securities during the period, net of tax [(560-(560*25%)] Foreign currency translation adjustment, net of tax [-420-(25%*420)] Total other comprehensive income Comprehensive income 420 -525 -105 4,860 CS Scanned with CamScanner