Hi

For Q.110, I did not understand why "Loss on disposal of equipment $18,000" (being an extraordinary item) is included in the calculation because of the question " Income before extraordinary item"?

For Q.112,113 Please explain the principle of total infrequent net gains losses that not considered extraordinary.

110. Logan Corp.'s trial balance of income statement accounts for the year ended December 31, 2014 included the following:

Debit Credit

Sales revenue $280,000

Cost of goods sold $150,000

Administrative expenses 40,000

Loss on disposal of equipment 18,000

Sales commission expense 16,000

Interest revenue 10,000

Freight-out 6,000

Loss due to earthquake damage 24,000

Bad debt expense 6,000

Totals $260,000 $290,000

Other information:

Logan's income tax rate is 30%. Finished goods inventory:

January 1, 2014 $160,000

December 31, 2014 140,000

On Logan's multiple-step income statement for 2014,

Income before extraordinary item is

a. $88,000.

b. $54,000.

c. $37,800. ($280,000 $150,000 $40,000 $18,000 $16,000 $6,000 $6,000 + $10,000 $16,200 = $37,800 )

d. $21,000.

112. Chase Corp. had the following infrequent transactions during 2014:

A $375,000 gain from selling the only investment Chase has ever owned.

A $525,000 gain on the sale of equipment.

A $175,000 loss on the write-down of inventories.

In its 2014 income statement, what amount should Chase report as total infrequent net gains that are not considered extraordinary?

a. $200,000.

b. $350,000.($525,000 $175,000 = $350,000.)

c. $725,000.

d. $900,000.

James, Inc. incurred the following infrequent losses during 2014:

A $210,000 write-down of equipment leased to others.

A $120,000 adjustment of accruals on long-term contracts.

A $180,000 write-off of obsolete inventory.

In its 2014 income statement, what amount should James report as total infrequent losses that are not considered extraordinary?

a. $510,000.

b. $390,000.

c. $330,000.

d. $300,000.