Question

Income statement and earnings per share for discontinued operations Apex Inc. reports the following for a recent year: Income from continuing operations before income tax expense $450,000 Loss from discontinued operations $81,000 * Weighted average number of shares outstanding 30,000 Applicable tax rate 40% *Net of any tax effect. Question Content Area a. Prepare a partial income statement for Apex Inc., beginning with income from continuing operations before income tax expense.

Answer 1

The partial income statement for Apex Inc. would start with an income from continuing operations before tax of $450,000, subtract the income tax expense at 40% to get $270,000. After accounting for the loss from discontinued operations of $81,000, the net income is $189,000. The earnings per share (EPS) are therefore calculated to be $6.30.

Step-by-step explanation:

Partial Income Statement for Apex Inc.

Income from continuing operations before income tax expense: $450,000

Income tax expense (40% of $450,000): $180,000

Income from continuing operations after income tax: $270,000

Loss from discontinued operations (net of tax): $81,000

Net income: $189,000

Earnings Per Share Calculation

Net income: $189,000

Weighted average number of shares outstanding: 30,000.

Earnings per share (EPS): $189,000 / 30,000 = $6.30