Question

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2018 ($ in 000s): sales revenue, $16,500; cost of goods sold, $6,800; selling expenses, $1,360; general and administrative expenses, $860; interest revenue, $120; interest expense, $240. Income taxes have not yet been recorded. The company’s income tax rate is 40% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2018 ($ in 000s). All transactions are material in amount. Investments were sold during the year at a loss of $280. Schembri also had unrealized gains of $380 for the year on investments. One of the company’s factories was closed during the year. Restructuring costs incurred were $1,800. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $620 in 2018 prior to the sale, and its assets were sold at a gain of $1,520. In 2018, the company’s accountant discovered that depreciation expense in 2017 for the office building was understated by $260. Negative foreign currency translation adjustment for the year totaled $300. Required: 1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2018, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 400,000 shares were issued on July 1, 2018. 2. Prepare a separate statement of comprehensive income for 2018.

Answer 1

Schembri Manufacturing Corporation
Statement of Comprehensive Income for the year ended December 31, 2018
	(000)	(000)
Sales		16500
Cost of Goods Sold		6800
Gross Profit		9700
Other incomes
Interest revenue	120
Distribution costs	1360
Administrative Expenses	860
Other expenses
Loss on sale of investment	280
Restructuring costs	1800
Finance costs	240	-4420
Income from continued operations before tax		5280
Income tax expenses		2112
Income from continued opeartions		3168
Discontinued Operations
Loss from discontinued operations	620
Income tax benefit	-248
Discontinued loss	372
Gain from sales of assets	1520
Income tax	-608
Income from discontinued expenses		540
Net Income		3708
Other comprehensive income
Unrealised gains from investments, net of tax	228
Loss from foreign currency translation, net of tax	-180	48
Comprehensive Income		3756
Earnings per share
Basic (3756000/1400000)		2.68
Diluted