Question

Marigold Corporation had income from continuing operations of $10,634,000 in 2020. During 2020, it disposed of its restaurant division at an after-tax loss of $206,700. Prior to disposal, the division operated at a loss of $320,700 (net of tax) in 2020 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Marigold had 10,000,000 shares of common stock outstanding during 2020. Prepare a partial income statement for Marigold beginning with income from continuing operations.

Answer 1

The partial income statement for Marigold Corporation includes income from continuing operations, the operating and disposal loss from the restaurant division as discontinued operations, and the subsequent calculation of net income and earnings per share.

Step-by-step explanation:

Income from Continuing Operations: $10,634,000

Discontinued Operations:

• Loss from operations of discontinued restaurant division (net of tax): $320,700
• Loss on disposal of the restaurant division (net of tax): $206,700

Total Loss from Discontinued Operations: $527,400

Net Income: $10,634,000 - $527,400 = $10,106,600

Earnings Per Share (EPS) from Continuing Operations: $10,634,000 / 10,000,000 shares = $1.0634 per share

Earnings Per Share (EPS) including Discontinued Operations: $10,106,600 / 10,000,000 shares = $1.0107 per share

Answer 2

MARIGOLD CORPORATION

Income Statement (Partial)

For the year ended December 31, 2020

Income from continuing operation $10,634,000

Discontinued operations

Loss from operation of discontinued $320,700

restaurant division(net of tax)

Loss from disposal of restaurant division $206,700 $527,400

(net of tax)

Net Income $10,106,600

Earnings per share

Income from discontinuing operations A 1.06

[10,634,000/10,000,000]

Loss from discontinued operations B 0.05

[527,400/10,000,000]

Net Income A/B 1.01