Yr ending Dec. 2012, abc Corp. had income from operations before taxes of 1200000 before considering the following. See also all transactions below are before taxes & amounts should be considered material.
** During 2012, one for ABC factories was damaged in an earthquake. The firm recognized a loss of 800,000. the event is considered unusual and infrequent.
** Nov. 2012, ABC sold its waffle house restaurant that qualified as a component of an entity.
The company adopted a plan to sell the chain in May 2012. The income from the chain from Jan. 1 2012 through November was 160,000 & the loss on sale of chain's assets was 300,000.
** In 2012,ABC sold one of its six factories for 1,200,000. At time of sale it had a carring value of 1,100,000. The factory was not concerned a component of the entity.
** in 2010, ABC accountant omitted the annual adj. for patent amortization expense of 120,000. The error was not discovered until dec. 2012.
Questions:
1 - Need to prepare an income statement, beginning with income from continuing operations before taxes, for the yr. ended dec. 2012. Assume income tax rate of 30%. ???? not sure of layout
2 - Explain the motivation for segregating certain income statement events from income from continuing operations????