Question

Comprehensive Problem- Chapter 4 Bas Baladi for the marketing of cooperative agricultural products is a company based in Ramallah. It operates two separate major divisions: Organic Food division, and Beverage division. On December 31, 2021, Bas Baladi had $327,000 operating Income. Required: a) Based on the below information (A-G). Use the following format to prepare the statement of comprehensive income. (Assume the tax rate is 20%) Note: Some of the items provided will not affect the statement of comprehensive income. A During 2021, the entity discovered that there's an error in the calculation of pension expense for 2020. The error overstated income before tax by $17,000. B Flood in Ramallah's farmland caused the company a loss of $11,000. They received insurance coverage of $6,500. Assume floods are common in Ramallah. C Bas Baladi decided to dispose of the Beverage division at the beginning of 2021. The Beverage division recognized a loss from operations of $150,000 before tax for the year ended 31 December 2021. The division was sold for $1,000,000, while the carrying value of the division's assets was $900,000. D In 2020 Bas Baladi purchased 10,000 shares of Padico stock at $1.2 per share. The stocks were categorized as a trading security. During 2021, the company received cash dividends of $0.05 per share. E Until 2021, the company has used weighted average, and on January 1, 2021. It has decided to switch to FIFO. The cumulative effect of this change is $60,000 before tax. F. The company suffered a $10,000 loss before tax from foreign currency translation of its subsidiary's financial statements. G Minority interest in net income amounted to $22,480.​

Answer 1

Step-by-step explanation:

Statement of Comprehensive Income

For the year ended December 31, 2021

Net income:

Operating income $327,000

Adjustment for error in pension expense (17,000)

Loss from flood (4,500)

Loss from disposal of Beverage division (150,000)

Gain from sale of Beverage division 100,000

Cumulative effect of change in accounting principle (60,000)

Loss from foreign currency translation (10,000)

Total comprehensive income $131,000

Tax Expense (20%* $131,000) $26,200

Net income after tax $104,800

Minority interest in net income $22,480

Net income attributable to owners $82,320

Note:

-A: Error in pension expense, overstated income before tax by $17,000

-B: Flood in Ramallah caused a loss of $11,000, Insurance coverage received $6,500

-C: Beverage division recognized a loss from operations of $150,000 before tax, The division was sold for $1,000,000, Carrying value of the division's assets was $900,000

-D: Purchased 10,000 shares of Padico stock at $1.2 per share, classified as trading security, received cash dividends of $0.05 per share

-E: Change in accounting principle from weighted average to FIFO, cumulative effect $60,000 before tax

-F: Loss from foreign currency translation of subsidiary's financial statements $10,000

-G: Minority interest in net income $22,480

It's worth noting that the above statement is showing the comprehensive income, which is an important way of presenting the financial results of a company, as it includes all the transactions and events, whether or not they are included in the company's net income, or whether or not they are reported in the company's statement of financial position.