eformulating Balance Sheet and Income Statement for an Asset Disposal

In 2019, USP Delivery recorded an impairment loss of $462,000 on its corporate plane. We wish to reformulate the companys income statement and balance sheet under the assumption that the plane had been used for the prior five yearssee Analyst Adjustments 6.2 for guidance. The companys tax rate is 25%.

a. For the income statement, identify with numbers the adjustments for each of the five years 2015-2019 for:

1. Loss on disposal

2. Depreciation

3. Tax expense
4. Net income

Use a negative sign with your answer to indicate an adjustment decreases the account.

Income Statement Adjustments				2015	2016	2017	2018	2019
Loss on disposal (reversal)								Answer
Tax Expense (reversal)								Answer
Net Income (reversal)								Answer
Depreciation				Answer	Answer	Answer	Answer	Answer
Tax Expense				Answer	Answer	Answer	Answer	Answer
Net income (adjustment)				Answer	Answer	Answer	Answer	Answer
Total net income (reversal + adjustment)				Answer	Answer	Answer	Answer	Answer

b. For the balance sheet, identify with numbers the adjustments for each of the five years 2015-2019 for:

1. Accumulated depreciation

2. Deferred tax
3. Retained earnings

Use a negative sign with your answer to indicate an adjustment decreases the account.

Balance Sheet Adjustments				2015	2016	2017	2018	2019
Accumulated depreciation				Answer	Answer	Answer	Answer	Answer
Deferred tax liability				Answer	Answer	Answer	Answer	Answer
Retained Earnings				Answer	Answer	Answer	Answer	Answer