Question

Please correct mistakes from previous attempt

Esquire Comic Book Company had income before tax of $1,650,000 in 2016 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 $415,000. The division generated before-tax income from operations from the beginning of the year through disposal of $630,000. Neither the loss on disposal nor the operating income is included in the $1,650,000 before-tax income the company generated from its other divisions. 2. The company incurred restructuring costs of $70,000 during the year. Required: Prepare a 2016 income statement for Esquire beginning with income from continuing operations. Assume an income tax rate of 40%. 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, 2016 632,000 215,000 (86,000) ncome from continuing operations Discontinued operations gain (loss) Income component operations of discontinued ncome tax expense

Answer 1

Income from continuing operations:

Income before considering additional items	1,650,000
Decrease in income due to restructuring costs	(70,000)
Before-tax income from continuing operations	1,580,000
Income tax expense (40%)	(632,000)
Income from continuing operations	948,000

So,

Income from continuing operations = $948,000

Net income = $1077000 (948000+129000)

ESQUIRE COMIC BOOK COMPANY

Partial Income Statement

For the Year Ended December 31, 2016

Income from continuing operations	$948,000
Discontinued operations gain (loss):
Income from operations of discontinued component	215,000
Income tax expense	(86,000)
Income on discontinued operations	129,000
Net income	$1077000