Purchase Solution

Income Statement and Earnings Management

Not what you're looking for?

Ask Custom Question

1. If a Company had Pretax Earnings from Continuing Operations of $150,000, a Loss from Discontinued Operations of ($30,000) and an Extraordinary gain from an Earthquake of $20,000 and a weighted average number of Common Shares Outstanding (no Preferred Stock) of 100,000 shs, how would the EPS (Earnings per sh) Statistics be presented on the Income Statement? The Company's Tax rate is 30%.

2. Does Earnings Management fit with GAAP?

Purchase this Solution
Solution Summary

This solution contains the income statement for the company in journalizing the transactions and explains if the earnings management fit with GAAP.

Solution Preview

1)
Based on the information given, the income statement of the company is as follows:

Income from continuing operations before income tax $150,000
Less income tax ($150,000 * 30%) 45,000
Income from continuing operation (150,000 - 45,000) 105,000
Loss from Discontinued Operation ($30,000)
Less applicable income tax ($30,000 * ...

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Financial Management: Preparing Income Statements

    Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant.

  • Balance sheets / income statements

    Balance sheet, income statement, statement of retained earnings and statement of cash flows are derived from the same underlying financial information, they relate closely to each other.

  • Interest Expense, Depeciation Expense and Dividends

    161167 Income Statement, Statement of Retained Earnings Please help me with the following 3 problems. Fundamentals of Financial Management 3-1 Income Statement little Books Inc. recently reported $3 million of net income.

  • financial statements

    Therefore, the Statement of retained earnings uses information from the Income statement and provides information to the Balance Sheet.

  • retained earnings

    The retained earnings are directly affected by the income statement because net income reported in the income statement affects the retained earnings.

  • explain financial statements

    Accountants summarize this information in a balance sheet, income statement, statement of retained earnings and statement of cash flows. Discussion Balance sheet, tells about the assets and liabilities of business.

  • Income Statement, Earnings per Share, Price Earnings Ratio

    624119 Income Statement, Earnings per Share, Price Earnings Ratio 1. Define the income statement. Can it be manipulated? Explain(expand on your response) 2. Define the earnings per share and price earnings ratios.

  • Managing Earnings

    Anytime management has to draw cash from anywhere except the checking account, it creates additional expenses which flow onto the income statement. All expenses on the income statement drop current period earnings.

  • Statement of cash flows

    Earnings can be very easily manipulated by management by recording sales that have not yet happened and other income statement tricks. This is primarily because of the accrual method of accounting that we follow. However, cash flows are cash flows.

View More Related Solutions