Note- Accounting Changes at the bottom of Page
Income from continuing operations
$790,000
Loss on sale of security
$(57,000)
Gain on insurance policy
64,000
Error in computation of deprecation
Previously stated (salvage value amount)
$9,000
Corrected amount (54,000 -9000=45,000/6)
7,500
$1,500
Income from continuing operations before income tax
$798,500
Income from continuing operations before income tax
$798,500
Non-taxable income from insurance policy
64,000
Taxable Income
734,500
Income tax rate (30%)
30%
Income tax expense
$220,350
Income from Continuing operations
$798,500
Income Tax
$220,350
Income from Continuing operations
$578,150
Loss on disposal of recreational division
$115,000
Less : applicable income tax (30%)
34,500
$80,500
Income before extraordinary items
$497,650
Extraordinary items
Loss on flood less applicable tax
$80,000
Less applicable tax (46%)
36,800
$43,200
Net Income
$454,450
Net Income Per Share Oustanding
Income from continuing operations (578,150/ 80,000)
$7.23
Income from discontinued operations (80,500/80,000)
-1.01
Income from extraordinary items (43,200 /80,000)
-0.54
Net income per share
$5.68
Changes in Accounting Principles
Average Cost
FIFO
2005
60,000
$60,000
2006
-20,000
$(20,000)
Total
$40,000
Excess of FIFO
over Average
Cost
