Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For the year ending December 31, 2021, Olivo Corporation had income from continuing operations before taxes of $1,380,000 before considering the following transactions and events.

For the year ending December 31, 2021, Olivo Corporation had income from continuing operations before taxes of $1,380,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should be considered material.

  1. In November 2021, Olivo sold its PizzaPasta restaurant chain that qualified as a component of an entity. The company had adopted a plan to sell the chain in May 2021. The income from operations of the chain from January 1, 2021, through November was $178,000 and the loss on sale of the chains assets was $336,000.
  2. In 2021, Olivo sold one of its six factories for $1,560,000. At the time of the sale, the factory had a book value of $1,280,000. The factory was not considered a component of the entity.
  3. In 2019, Olivos accountant omitted the annual adjustment for patent amortization expense of $138,000. The error was not discovered until December 2021.

Required: Figure Olivos income statement, beginning with income from continuing operations before taxes, for the year ended December 31, 2021. Assume an income tax rate of 25%. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)

OLIVO CORPORATION
Partial Income Statement
For the Year Ended December 31, 2021
Income from continuing operations before income taxes
Income tax expense
Income from continuing operations 0
Discontinued operations:
Loss from operations of discontinued component
Income tax benefit
Loss on discontinued operations 0
Net income $0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

How autonomous should the target be left after the merger deal?

Answered: 1 week ago