In: Accounting
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?
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 |
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