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    Accounting questions

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    PRACTICE 8

    Prepare an Income Statement to determine Income from continuing operations and below the line: a) extraordinary loss ($100 tax) and b) loss in discontinued operations ($120 tax).

    (PRACTICE 8) COMPUTATION OF INCOME FROM CONTINUING OPERATIONS
    Sales $12,000
    Cost of goods sold 5,000
    Gross profit $7,000
    Less: Selling and administrative expense 1,450
    Operating income $5,550
    Interest expense 900
    Income before income taxes $4,650
    Income tax expense (40%) 1,860
    Income from continuing operations $2,790

    (Practice 5)

    PREPARE THE CALCULATION ON ACCOUNTING FOR CHANGES IN ESTIMATES
    Original depreciation = $80,000/20 years = $4,000 per year
    Accumulated depreciation as of January 1, 2011 = $4,000 per year × 5 years = $20,000

    Revised depreciation the new total life of the asset is 25 years.

    Prepare the depreciation entry for this year. Should anything else be done?

    (Practice 6)

    Prepare the amortization entry for this year.

    Original cost of patent $ 400,000
    Amortization for 3 years ($40,000 per year 2008-2010) 120,000
    Remaining unamortized balance $ 280,000

    New estimated life from January 1, 2011 4 years

    What is the new amortization expense for the year?

    Should there be a disclosure of the increase in amortization because of the change in estimate?

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    https://brainmass.com/business/finance/calculate-income-operations-change-estimates-341360

    Solution Preview

    Please see the attachment.

    PRACTICE 8
    Prepare an Income Statement to determine Income from continuing operations and below the line: a) extraordinary loss ($100 tax) and b) loss in discontinued operations ($120 tax).
    (PRACTICE 8) COMPUTATION OF INCOME FROM CONTINUING OPERATIONS
    Sales $12,000
    Cost of goods sold 5,000
    Gross profit $ 7,000
    Less: Selling and administrative expense 1,450
    Operating income $ 5,550
    Interest expense 900
    Income before income taxes $ 4,650
    Income tax expense (40%) 1,860
    Income from continuing operations $ 2,790
    Loss from discontinued operations (net of tax benefit $120) 180
    Income before ...

    Solution Summary

    The solution explains some accounting questions relating to income from operations; changes in estimates; amortization entry

    $2.19