acc201wa3 - P 4-2.1 JACKSON HOLDING COMPANY Comparative...

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P 4-2.1 JACKSON HOLDING COMPANY Comparative Income Statements (in part) For the Years Ended December 31 2011 2010 Income from continuing operations before income taxes [1] . ................................. $3,000,000 $1,300,000 Income tax expense . ................................ 1,200,000 520,000 Income from continuing operations . ......... 1,800,000 780,000 Discontinued operations: Income from operations of discontinued component (including gain on disposal of $600,000 in 2011) [2] . ........................... 200,000 (300,000) Income tax expense (benefit) . ................ 80,000 120,000 Income (loss) on discontinued operations .................................................................. 120,000 (180,000 ) Net Income . .............................................. $1,920,000 $ 600,000 1 Income from continuing operations before income taxes:
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2011 2010 Unadjusted $2,600,000 $1,000,000 Add: Loss from discontinued operation 400,000 300,000 Adjusted $3,000,000 $1,300,000 2 Income from discontinued operations: 2011 2010 Operating loss $(400,000) $(300,000) Gain on disposal 600,000 - Total $ 200,000 $(300,000 ) P4-2.2 The 2011 income from discontinued operations would include only the operating loss of $400,000. P4-2.3 The 2011 income from discontinued operations would include the operating loss of $400,000 as well as an impairment loss of $500,000. P4-4
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1. Restructuring is an event that is either unusual or infrequent, but not both. Restructuring costs should be included in income from continuing operations but reported as a separate income statement component. The item is reported gross, not net of tax as with extraordinary gains and losses. 2. Not Sure 3. The correction of the error should be treated as a prior period adjustment to beginning retained earnings. E5-1.1 Alpine West should recognize revenue over the ski season on an anticipated usage basis equally throughout the season. The fact that the $450 price is nonrefundable is not relevant to the revenue recognition decision. Revenue should be recognized as it is earned. E5-1.2 November 6, 2011 Cash. ...................................................................... 450 Unearned revenue. ............................................. 450 December 31, 2011 Unearned revenue ($450 x 1 / 5 )............................... 90 Revenue. ............................................................ 90
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acc201wa3 - P 4-2.1 JACKSON HOLDING COMPANY Comparative...

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