Question

Nash Corporation had income from continuing operations of $10,813,600 in 2020. During 2020, it disposed of its restaurant division at an after-tax loss of $206,600. Prior to disposal, the division operated at a loss of $316,100 (net of tax) in 2020 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Nash had 10,000,000 shares of common stock outstanding during 2020. Prepare a partial income statement for Nash beginning with income from continuing operations. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Answer and Explanation:

The presentation of the partial income statement is presented below:

Nash Corporation

Partial income statement

Income from continuing operations $10,813,600

Discontinued operations

Loss from operations of a division $316,100

Loss from disposal of the division $206,600 ($522,700)

Net income $10,290,900

Earning per share

Income from continuing operations

($10,813,600 ÷ 10,000,000 shares) $1.08

Less Discontinued operations

($522,700 ÷ 10,000,000 shares) -$0.05

Net income

($10,290,900 ÷ 10,000,000 shares) $1.03

We simply deduct the losses from the income so that the net income could arrive