Question

Check Esquire Comic Book Company had income before tax of $2,000,000 in 2021 before considering the following material items 1. Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting principles. The before-tax loss on disposal was $440,000. The division generated before-tax income from operations from the beginning of the year through disposal of $700,000. 2. The company incurred restructuring costs of $65,000 during the year. Required: Prepare a 2021 income statement for Esquire beginning with income from continuing operations. Assume an income tax rate of 25%. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.) + ESQUIRE COMIC BOOK COMPANY Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations Discontinued operations: .

Answer 1

ESQUIRE COMIC BOOK COMPANY
Partial Income Statement
For the year ended December 31, 2021
	$
Income from continuing operations	1,451,250.00
Discontinued operations gain (loss):
Income from operations of discontinued component	260,000.00
Income tax expense (260,000*25%)	(65,000.00)
Income on discontinued operations	195,000.00
Net income (1,451,250+195,000)	1,646,250.00
Explanation
Income from operations of discontinued component = $ 700,000-440,000 = $260,000
Income from continuing operations:
Income before considering additional items	2,000,000.00
Decrease in income due to restructuring costs	(65,000.00)
Before­ tax income from continuing operations	1,935,000.00
Income tax expense (25%)	(483,750.00)
Income from continuing operations	1,451,250.00