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how to calculate the net of tax, operating loss and gain in sale of asset in discontinued operations? Presented below is information which relates to
how to calculate the net of tax, operating loss and gain in sale of asset in discontinued operations?
Presented below is information which relates to Johnson Inc. ("Johnson") for the year ended December 31, 2019: Additional information: 1. Early in 2019, Johnson changed amortization methods for its plant assets from the double declining-balance to the straightline method. The affected assets were purchased at the beginning of 2017 for $200,000, had no residual value, and had useful lives of 10 years. Amortization expense of $20,000 is included in the "Selling and Administrative Expenses" of $370,000 above. 2. On September 1, 2019, Johnson sold one of its segments (product line) to Bhuerle industries for a gain (pre-tax) of $550,000. During the period January 1 to August 31, the discontinued segment incurred an operating loss (pre-tax) of $480,000. This loss is not included in any of the numbers shown above. 3. Included in "Selling and Administrative Expenses" is "Bad Debts Expense" of $26,000. Johnson bases its bad debts expense upon a percentage of sales. In 2017 and 2018, the percentage was 1.5 percent. In 2019, the percentage was changed to 2 percent. 4. Johnson inci's shares trade on the Toronto Stock Exchange. Instructions PART I REQRUIED: Prepare, in good form, a multiple-step income statement for 2019 for Johnson Inc. Assume a 40 percent tax rate and that 40,000 common shares and 10,000 preferred shares were outstanding during the year (there was no change in shares outstanding during the year). (25 marks) Discontinued Operations Operating loss (net of tax192,000)(288,000) Gain on sale of asset (net of tax220,000 ) 330,000 42,000 Step by Step Solution
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