Presented below is a combined single-step income and retained earnings statement for Nerwin Company for 2025.

Additional facts are as follows.

1. “Selling, general, and administrative expenses” for 2025 included a charge of $8,500,000 that was usual but infrequently occurring.

2. “Other, net” for 2025 included a loss on sale of equipment of $6,000,000.

3. “Adjustment required for correction of an error” was a result of a change in estimate (useful life of certain assets reduced to 8 years and a catch-up adjustment made).

4. Nerwin Company disclosed earnings per common share for net income in the notes to the financial statements.

Instructions

Determine from these additional facts whether the presentation of the facts in the Nerwin Company income and retained earnings statement is appropriate. If the presentation is not appropriate, describe the appropriate presentation and discuss its theoretical rationale. (Do not prepare a revised statement.)

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Net sales revenue Costs and expenses Cost of goods sold Selling, general, and administrative expenses Other, net Income before income tax Income tax Net income Retained earnings at beginning of period, as previously reported Adjustment required for correction of error Retained earnings at beginning of period, as restated Dividends on common stock Retained earnings at end of period $500,000 66,000 17,000 141,000 (7,000) (000 omitted) $640,000 583,000 57,000 19,400 37,600 134,000 (12,200) $159,400