Question

In: Accounting

3. Delray Inc. follows IFRS and has the following amounts for the year ended December 31,...

3. Delray Inc. follows IFRS and has the following amounts for the year ended December 31, 2020: gain on disposal of FV-NI investments (before tax), $15,000; loss from operation of discontinued division (net of tax), $42,000; income from operations (before tax), $220,000; unrealized holding gain-OCI (net of tax) $12,000; income tax on income from continuing operations, $63,000; loss on disposal of discontinued division (net of tax), $75,000. The unrealized holding gain-OCI relates to investments that are not quoted in an active market. a. Calculate income from continuing operation. b. Calculate net income. c. Calculate other comprehensive income. d. Calculate comprehensive income. e. How would your answers to parts (a) to (d)be different if Delray followed ASPE?

Solutions

Expert Solution

solution a) Calculate income from continuing operation:

gain on disposal of FV-NI investments (before tax) = $15,000

Add income from operations (before tax) = $220,000

Total income from continuing operation = $235,000

less: income tax on income from continuing operations=($63,000)

net income from continuing operation = $172,000

b)Calculate net income

net income from continuing operation = $172,000

less:loss from operation of discontinued division (net of tax) = ($42,000)

less: loss on disposal of discontinued division (net of tax) = ($75,000)

net income =$55,000

c)Calculate other comprehensive income

unrealized holding gain-OCI (net of tax) = $12,000

d)Calculate comprehensive income

net income    =$55,000

add:other comprehensive income =$12,000

Total comprehensive income = $67,000

e) AS perASPE the concept of other comprehensive income is not available and also presentation changed in ASPE , as per ASPE net income presented as follows:

Revenue:
gain on disposal of FV-NI investments 15,000
income from operations 220,000
unrealized holding gain 12,000
Total revenue from continuing operation 247,000
less income tax (63,000)
income from continuing operation(a) 184,000
discontinued operation
loss from operation of discontinued division (net of tax) (42,000)
loss on disposal of discontinued division (net of tax) (75,000)
Total loss from discontinued operation (b) (117,000)
net income[a +b] 67,000

(if you have any doubt related to this just ask me.....all the best champ)


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