Problem:
For the year ending December 31, 2013, Micron Corporation had income from continuing operations before taxes of $1,390,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should be considered material.
- During 2013, one of Micron's factories was damaged in an earthquake. As a result, the firm recognized a loss of $819,000. The event is considered unusual and infrequent.
- In November 2013, Micron sold its Waffle House restaurant chain that qualified as a component of an entity. The company had adopted a plan to sell the chain in May 2013. The income from operations of the chain from January 1, 2013, through November was $179,000 and the loss on sale of the chain's assets was $338,000.
- In 2013, Micron sold one of its six factories for $1,580,000. At the time of the sale, the factory had a carrying value of $1,290,000. The factory was not considered a component of the entity.
- In 2011, Micron's accountant omitted the annual adjustment for patent amortization expense of $139,000. The error was not discovered until December 2013.
Requirement:
Question: Prepare Micron's income statement, beginning with income from continuing operations before taxes, for the year ended December 31, 2013. Assume an income tax rate of 40%.
Note: Show supporting computations in good form.