Illustration schindler co has income before income

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Accounting
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Chapter 4 / Exercise EX4-26
Accounting
Reeve/Warren
Expert Verified
Illustration: Schindler Co. has income before income tax of $250,000. It suffers a loss from discontinued operations of $100,000. Assuming a 30 percent tax rate, Schindler presents the income tax on the income statement as shownDiscontinued Operations (Loss)LO 4 Explain how to report various income items.Discontinued OperationsIllustration 4-11
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Accounting
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Chapter 4 / Exercise EX4-26
Accounting
Reeve/Warren
Expert Verified
4-26Extraordinary items are nonrecurring materialitems that differ significantly from a company’s typical business activities.Extraordinary item must meet both of the following criteria: Unusual nature and Infrequently of occurrenceCompany must consider the environment in which it operates.Amount reported “net of tax.”LO 4 Explain how to report various income items.Reporting Various Income Items
4-27Are these items Extraordinary?(a) A large portion of a tobacco manufacturer’s crops are destroyed by a hail storm. Severe damage from hail storms in the locality where the manufacturer grows tobacco is rare.(b) A citrus grower's Florida crop is damaged by frost. (c) A company sells a block of common stock of a publicly traded company. The block of shares, which represents less than 10% of the publicly-held company, is the only security investment the company has ever owned.
Extraordinary Items
YESLO 4 Explain how to report various income items.Advance slide in presentation mode to reveal answers.
4-28(d) A large diversified company sells a block of shares from its portfolio of securities which it has acquired for investment purposes. This is the first sale from its portfolio of securities.Extraordinary Items(e) An earthquake destroys one of the oil refineries owned by a large multi-national oil company. Earthquakes are rare in this geographical location.(f) A company experiences a material loss in the repurchase of a large bond issue that has been outstanding for 3 years. The company regularly repurchases bonds of this nature.
LO 4Are these items Extraordinary?Extraordinary Items
4-29Illustration: Schindler Co. has income before income tax and extraordinary item of $250,000. It has an extraordinary gain of $100,000 from a condemnation settlement received on one its properties (30 percent tax rate). Income statement presentation:Extraordinary GainsLO 4 Explain how to report various income items.Illustration 4-13Extraordinary Items
4-30Illustration: Schindler Co. has income before income tax and extraordinary item of $250,000. It suffers an extraordinary loss from a major casualty of $100,000 (30 percent tax rate). The loss provides a positive tax benefit. Income statement presentation:Extraordinary LossesLO 4 Explain how to report various income items.Illustration 4-14Extraordinary Items
4-31Extraordinary Itemsare reported after“Income from continuing operations” and after“Discontinued Operations.”Illustration 4-9Illustration 4-19
4-32When a company owns substantial interests (generally > 50%) in another company, GAAP requires that the financial statements of both companies be consolidated together into one set of financials.

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