Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Related to the external financing of the company.
B) Groups all revenues and gains.
C) Related to the acquisition and disposition of long-term assets.
D) Not directly related to a firm’s principal revenue-generating activities.
E) Likely to be discontinued within a year.
132) Single-step income statement
133) Financing activities
134) Held for sale component
135) Nonoperating activities (income statement)
136) Investing activities
Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Total nonowner changes in equity for a reporting period.
B) Reported net of tax immediately after income from continuing operations.
C) Reports intermediate subtotals in arriving at net income.
D) Reported in the nonoperating section of the income statement.
E) Reports the cash effects of each operating activity directly on the statement.
137) Comprehensive income
138) Discontinued operations
139) Gain/loss from sale of investments
140) Multiple-step income statement
141) Direct method
Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) If sold or held for sale, reported as a discontinued operation.
B) Required disclosure for publicly traded corporations.
C) Separately stated component of continuing operations.
D) Ability of reported income to predict future earnings.
E) Calculations work backward from net income to cash flow from operating activities.
142) Earnings per share
143) Indirect method
144) Restructuring costs
145) Earnings quality
146) Component of an entity
Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Costs incurred often relate to downsizing.
B) Financing activity (SCF).
C) The acquisition of assets by issuing debt or equity securities.
D) Total nonowner change in equity for a reporting period.
E) When grouped together, essentially net income on a cash basis.
147) Issuance of common stock
148) Operating activities (SCF)
149) Restructuring costs
150) Noncash financing and investing activities
151) Comprehensive income
Listed below are ten terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Other comprehensive income item.
B) Component of the entity has been sold or will be sold.
C) Reports a series of intermediate subtotals.
D) Required disclosure for publicly traded corporations.
E) Total nonowner change in equity.
F) Accounted for prospectively.
G) Costs generally associated with downsizing.
H) Ability of reported income to predict future earnings.
I) Tangentially related to normal operations.
J) Accounted for retrospectively by revising prior years’ statements.
152) Earnings per share
153) Comprehensive income
154) Restructuring costs
155) Multiple-step income statement
156) Foreign currency translation adjustment
157) Change in estimate
158) Nonoperating income
159) Change in accounting principle
160) Discontinued operations
161) Earnings quality
Use this information to answer the following questions:
On September 1, 2018, Jacob Furniture Mart enters into a tentative agreement to sell the assets of
its office equipment division. This division qualifies as a component of the entity according to
GAAP regarding discontinued operations. The division’s contribution to Jacob’s operating
income for 2018 was a $3 million loss before taxes. Jacob has an average tax rate of 30%.
Required: Consider independently the appropriate accounting by Jacob under the three scenarios
below.
162) Scenario 1: Assume that Jacob sold the division’s assets on December 31, 2018, for $24
million. The book value of the division’s assets was $19 million at that date. Under these
assumptions, what would Jacob report in its 2018 income statement regarding the office
equipment division? Explain where this information would be presented.
163) Scenario 2: Assume that Jacob had not yet sold the division’s assets by the end of 2018.
Further, assume that the fair value less costs to sell of the division’s assets at December 31, 2018,
was $24 million and was expected to remain the same when the assets are sold in 2019. The
book value of the division’s assets was $19 million at the end of 2018. Under these assumptions,
what would Jacob report in its 2018 income statement regarding the office equipment division?
Explain where this information would be presented.
164) Scenario 3: Assume that Jacob had not yet sold the office furniture division by the end of
2018. Further, assume that the fair value less costs to sell of the division’s assets at December 31,
2018, was $12 million and was expected to remain the same when the assets are sold in 2019.
The book value of the division’s assets was $19 million at the end of 2018. Under these
assumptions, what would Jacob report in its 2018 income statement regarding the office
equipment division? Explain where this information would be presented.
165) The Filzinger Corporation’s December 31, 2018 year-end trial balance contained the
following income statement items:
Account Title
Debits
Credits
Sales revenue
6,700,000
Interest revenue
70,000
Gain on sale of investments
52,000
Cost of goods sold
4,200,000
Selling expenses
350,000
General and administrative expenses
948,000
Interest expense
30,000
Research and development expense
600,000
Income tax expense
145,000
Required: Calculate the company’s operating income for the year using a single-step income
statement format.
166) Canton Corporation reported the following items in its adjusted trial balance for the year
ended December 31, 2018:
Income from continuing operations before income taxes
$110,000
Gain on disposal of discontinued component
28,000
Loss from operations of discontinued component
(50,000)
Canton is subject to a 30% tax rate.
Required: Prepare the December 31, 2018, income statement for Canton Corporation, starting
with income from continuing operations before income taxes.
Use this information to answer the following questions:
Plano Co. 12/31/2018
Credits
Partial Trial Balance Data
Sales revenue
700,000
Interest revenue
60,000
Gain on sale of investments
110,000
Cost of goods sold
Selling expenses
Interest expense
General and administrative expenses
Plano had 50,000 shares of stock outstanding throughout the year. Income tax expense has not
yet been accrued. The effective tax rate is 30%.
167) Required: Prepare a single-step income statement with earnings per share disclosure.
Revenues and gains:
Expenses:
Income before income taxes
Income tax expense
Net income
Earnings per share
168) Required: Prepare a multiple-step income statement with earnings per share disclosure.
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Use this information to answer the following questions:
The trial balance of Kroeger Inc. included the following accounts as of December 31, 2018:
Debits
Credits
Sales revenue
8,200,000
Interest revenue
60,000
Gain on sale of investments
120,000
Unrealized gains on investments
140,000
Foreign currency translation adjustment
160,000
Cost of goods sold
6,100,000
Selling expenses
600,000
Goodwill impairment loss
500,000
Interest expense
30,000
General and administrative expenses
500,000
Kroeger had 300,000 shares of stock outstanding throughout the year. Income tax expense has
not yet been accrued. The effective tax rate is 40%.
169) Required: Prepare a 2018 multiple-step income statement for Kroeger Inc. with earnings
per share disclosure.
170) Required: Prepare a 2018 separate statement of comprehensive income for Kroeger Inc.
171) Required: Prepare a 2018 single, continuous statement of comprehensive income for
Kroeger Inc. Use a multiple-step income statement format.
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172) The following income statement items appeared on the adjusted trial balance of Foxworthy
Corporation for the year ended December 31, 2018 ($ in 000s): sales revenue, $22,300; cost of
goods sold, $14,500; selling expenses, $2,300; general and administrative expenses, $1,200;
dividend revenue from investments, $200; interest expense, $300. Income taxes have not yet
been accrued. The company’s income tax rate is 40% on all items of income or loss. These
revenue and expense items appear in the company’s income statement every year. The company’s
controller, however, has asked for your help in determining the appropriate treatment of the
following nonrecurring transactions that also occurred during 2018 ($ in 000s). All transactions
are material in amount.
1. Investments were sold during the year at a loss of $300. Foxworthy also had unrealized
holding losses of $200 for the year on investments.
2. One of the company’s factories was closed during the year. Restructuring costs incurred
were $2,000.
3. During the year, Foxworthy completed the sale of one of its operating divisions that
qualifies as a component of the entity according to GAAP regarding discontinued operations.
The division had incurred operating income of $800 in 2018 prior to the sale, and its assets were
sold at a loss of $1,800.
4. A positive foreign currency translation adjustment for the year totaled $600.
Required:
Prepare Foxworthy’s single, continuous statement of comprehensive income for 2018, including
earnings per share disclosures. Use a multiple-step income statement format. Two million shares
of common stock were outstanding throughout the year.
Use this information to answer the following questions:
The trial balance of Lakewood Inc. included the following accounts as of December 31, 2018:
Debits
Credits
Sales revenue
1,800,000
Interest revenue
80,000
Gain on sale of investments
50,000
Cost of goods sold
1,100,000
Selling expenses
220,000
Write-off of obsolete equipment
30,000
Interest expense
40,000
General and administrative expenses
200,000
Lakewood Inc. had 100,000 shares of stock outstanding throughout the year. Income tax expense
has not yet been accrued. The effective tax rate is 30%.
173) Required: Prepare a single-step income statement with earnings per share disclosure.
174) Required: Prepare a multiple-step income statement with earnings per share disclosure.