For the year ending December 31, 2018, Benson Corporation had Income from contin
ID: 2554042 • Letter: F
Question
For the year ending December 31, 2018, Benson Corporation had Income from continuing operations before taxes of $1,320,000 before considering the following transactions and events. All of the Items described below are before taxes and the amounts should be considered matertal. 1 In November 2018, Benson sold its Pancake Village restaurant chain that qualified as a component of an entity. The company had adopted a plan to sell the chain in May 2018. The Income from operations of the chain from January 1, 2018, through November was 4.16 points $172,000 and the loss on sale of the chain's assets was $324,000. factory was not considered a component of the entity discovered until December 2018. 2 In 2018, Benson sold one of its six factorles for $1,440,000. At the tme of the sale, the factory had a book value of $1,220,000. The 3. In 2016. Benson's accountant ominted the annual adjustment for patent amortization expense of $132,000. The error was not Print Required: Prepare Benson's Income statement, beg?nning with Income from continuing operations before taxes, for the year ended December 31, 2018. Assume an income tax rate of 30% ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.) Partial Income Statement For the Year Ended D 31, 2018 Income from continuing operations before income taxes Income from continuing operations Disoontinued operations Loss on discontinued operationsExplanation / Answer
Note 1 : Prior period annual adjustment should be adjusted in Retained earning statement . It will not impact the curren year net income as such
Note 2 : Computation of Adjusted Income from operations before tax
Note 3: Loss on discontinued operations = Income from operations - Loss on sale of chain's assets
= $172,000 - $324,000 = - $152,000
Answer
BENSON CORPORATION.
Partial Income Statement.
For the year Ended December 31,2018
Unadjusted Income before tax $1,320,000 Add : Gain from sales of Factories [$1,440,000 - $1,220,000] $220,000 Adjusted Income from operations before tax $1,540,000