solutions%20ch04%20P4-7 - Income from continuing operations.

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AIM 3331-0U1 Solutions to suggested assignments Chapter 4 PROBLEM 4-7 Rap Corp. Income Statement (Partial) For the Year Ended December 31, 2007 Income from continuing operations before income tax. ................................ $1,206,000* Income tax. ....................................... 458,280 ** Income from continuing operations. ...... 747,720 Discontinued operations Loss from operations of discontinued subsidiary. ............ $ 90,000 Less: Applicable income tax reduction. ....................... 34,200 $ 55,800 Loss from disposal of subsidiary. ... 100,000 Less: Applicable income tax reduction. ....................... 38,000 62,000 117,800 Income before extraordinary item. .......... 629,920 Extraordinary item: Gain on condemnation. .................. 145,000 Less: Applicable income tax. ......... 58,000 87,000 Net income. ................................................ $ 716,920 Per share of common stock:
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Unformatted text preview: Income from continuing operations. ................................. $7.48* Discontinued operations, net of tax. ................................. (1.18 )* Income before extraordinary item. ..................................... 6.30 Extraordinary item, net of tax. ............................................ .87 Net income ($716,920 100,000). ....................................... $7.17 1 AIM 3331-0U1 *Rounded PROBLEM 4-7 (Continued) *Computation of income from continuing operations before income tax: As previously stated $1,210,000 Loss on sale of equipment [$40,000 ($80,000 $36,000)] (4,000 ) Restated $1,206,000 **Computation of income tax expense: $1,206,000 X .38 = $458,280 Note: The error related to the intangible asset was correctly charged to retained earnings. 2...
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This note was uploaded on 08/06/2009 for the course BUSINESS 4444 taught by Professor Dr.dale during the Spring '09 term at University of Texas at Dallas, Richardson.

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solutions%20ch04%20P4-7 - Income from continuing operations.

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