Exercise 4-8 Discontinued operations; disposal in subsequent year [LO4-4] Kandon Enterprises, Inc., has two operating divisions;...

Exercise 4-8 Discontinued operations; disposal in subsequent year [LO4-4]

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and on November 15, 2018, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2019. At December 31, 2018, the component was considered held for sale.

On December 31, 2018, the company’s fiscal year-end, the book value of the assets of the horse division was $272,000. On that date, the fair value of the assets, less costs to sell, was $220,000. The before-tax loss from operations of the division for the year was $160,000. The company’s effective tax rate is 40%. The after-tax income from continuing operations for 2018 was $420,000.

Required:

1. Prepare a partial income statement for 2018 beginning with income from continuing operations. Ignore EPS disclosures.

KANDON ENTERPRISES, INC.
Partial Income Sheet
For the Year Ended on December 31, 2018
Income from continuing operations	$420,000
Discontinued Operations gain (loss):

2. Prepare a partial income statement for 2018 beginning with income from continuing operations. Assuming that the estimated net fair value of the horse division’s assets was $440,000, instead of $220,000. Ignore EPS disclosures.

KANDON ENTERPRISES, INC.
Partial Income Sheet
For the Year Ended on December 31, 2018
Income from continuing operations	$420,000
Discontinued Operations gain (loss):

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and, on November 15, 2021, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2022. At December 31, 2021, the component was considered held for sale. On December 31, 2021, the company’s fiscal year-end, the book value...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and, on November 15, 2021, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2022. At December 31, 2021, the component was considered held for sale. On December 31, 2021, the company’s fiscal year-end, the book value...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and, on November 15, 2021, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2022. At December 31, 2021, the component was considered held for sale. On December 31, 2021, the company’s fiscal year-end, the book value...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and, on November 15, 2021, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2022. At December 31, 2021, the component was considered held for sale. On December 31, 2021, the company’s fiscal year-end, the book value...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and, on November 15, 2021, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2022. At December 31, 2021, the component was considered held for sale. On December 31, 2021, the company’s fiscal year-end, the book value...

3. Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and...

3. Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and, on November 15, 2021, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2022. At December 31, 2021, the component was considered held for sale. On December 31, 2021, the company’s fiscal year-end, the book...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells...

Kandon Enterprises, Inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. Both divisions are considered separate components as defined by generally accepted accounting principles. The horse division has been unprofitable, and, on November 15, 2021, Kandon adopted a formal plan to sell the division. The sale was completed on April 30, 2022. At December 31, 2021, the component was considered held for sale. On December 31, 2021, the company’s fiscal year-end, the book value...

Reporting on Discontinued Operations—Disposal in Current Year On August 1, 2020, Fischer Inc. decided to discontinue...

Reporting on Discontinued Operations—Disposal in Current Year On August 1, 2020, Fischer Inc. decided to discontinue the operations of its Services Division, which qualifies as a business component. An agreement was formalized to sell this component for $436,800 cash. The book value of the assets of the Services Division was $504,000. The disposal date was August 1, 2020. The income tax rate is 25%, and the accounting year-end is December 31. On December 31, 2020, the pretax income from all...

Exercise 4-8 Equivalent Units; Cost per Equivalent Unit; Assigning Costs to Units-Weighted-Average Method [LO4-2, LO4-3, LO4-4]...

Exercise 4-8 Equivalent Units; Cost per Equivalent Unit; Assigning Costs to Units-Weighted-Average Method [LO4-2, LO4-3, LO4-4] Helix Corporation uses the weighted-average method in its process costing system. It produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department follow: Percent Complete Units Materials Conversion Work in process...

Problem 4-5 (Algo) Income statement presentation; Restructuring costs; Discontinued operations; Accounting error [LO4-1, 4-3, 4-4, 4-5]...

Problem 4-5 (Algo) Income statement presentation; Restructuring costs; Discontinued operations; Accounting error [LO4-1, 4-3, 4-4, 4-5] The preliminary 2021 income statement of Alexian Systems, Inc., is presented below: ALEXIAN SYSTEMS, INC. Income Statement For the Year Ended December 31, 2021 ($ in millions, except earnings per share) Revenues and gains: Sales revenue $ 435 Interest revenue 10 Other income 132 Total revenues and gains 577 Expenses: Cost of goods sold 251 Selling and administrative expense 146 Income tax expense 45...

Subjects