Question

John Deere is an American manufacturer of agricultural, construction, and forestry machinery. The following income statement items appeared on the adjusted trial balance of John Deere Corporation for the year ended December 31,2021 $ in 000 s, sales revenue, $21,300; cost of goods sold, $14,000; selling expense, $2,200; general and administratlve expense, \$1,100; dividend revente from investments, $100; interest expense, $200. Income taxes have not yet been accrued. The company's income tax rate is 25% on an items of income or loss. These revenue and expense items appear in the company's income statement every year. The company's controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021 $ in 000s. All transactions are material in amount.

1. Investments were sold during the year at a loss of $200. John Deere also had an unrealized loss of $100 for the year on investments. The unrealized loss represents a decrease in the fair value of debt securities and is classified as part of other comprehenslve income.
2. One of the company's factories was closed during the year. Restructuring costs incurred were $1,000.
3. During the year, John Deere completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP regarding discontinued operations. The division had incurred operating income of $700 in 2021 prior to the sale, and its assets were sold at a loss of $2,000.
4. A positive foreign currency translation adjustment for the year totaled $700.
Required: Prepare John Deere's single, continuous statement of comprehensive income for 2021 , including earnings per share disclosures: Use multiple-step income statement format. Three million shares of common stock were outstanding throughout the year

Answer 1

John Deere's statement of comprehensive income for 2021 includes regular operations income and the impact of a nonrecurring transaction from the sale of a division reported under discontinued operations. The net income is $2,125 and earnings per share (EPS) is calculated as $2,125 divided by the 3,000 shares outstanding, resulting in an EPS of $0.708.

Step-by-step explanation:

To prepare John Deere's single, continuous statement of comprehensive income for the year ended December 31, 2021, using a multiple-step income statement format, first we compile the recurring operational revenues and expenses. Then, we deal with nonrecurring transactions such as the sale of a division that is reported separately under discontinued operations.

Here is a simplified version of the income statement:

• Sales Revenue: $21,300
• Cost of Goods Sold: -$14,000
• Gross Profit: $7,300
• Selling Expenses: -$2,200
• General and Administrative Expenses: -$1,100
• Operating Income: $4,000
• Other Income (Dividend Revenue): $100
• Interest Expense: -$200
• Income from Continuing Operations Before Taxes: $3,900
• Income Taxes (25%): -$975
• Income from Continuing Operations: $2,925
• Discontinued Operations (Operating Income): $700
• Loss on Sale of Division: -$2,000
• Income Tax Benefit on Discontinued Operations (25% of Loss): $500
• Net Income from Discontinued Operations: -$800
• Net Income: $2,125
• Earnings Per Share (EPS): Net Income / Number of Shares = $2,125 / 3,000 = $0.708