Question
Income Statement - Entity A Revenues $1,000,000 Expenses (400,000) Gains (losses) that are not extraordinary (100,000) Other gains (losses) 20,000 Income from continuing operations 520,000
Income Statement - Entity A
| Revenues | $1,000,000 |
| Expenses | (400,000) |
| Gains (losses) that are not extraordinary | (100,000) |
| Other gains (losses) | 20,000 |
| Income from continuing operations | 520,000 |
| Gains (losses) from discontinued operations | 75,000 |
| Extraordinary gains (losses) | 20,000 |
| Cum. effect of changes in accounting principles | 10,000 |
| Net income | $625,000 |
Income Statement - Entity B
| Revenues | $1,000,000 |
| Expenses | (800,000) |
| Gains (losses) that are not extraordinary | 0 |
| Other gains (losses) | 20,000 |
| Income from continuing operations | 180,000 |
| Gains (losses) from discontinued operations | (275,000) |
| Extraordinary gains (losses) | 20,000 |
| Cum. effect of changes in accounting principles | 10,000 |
| Net income | $(65,000) |
1 - What observations would you make in comparing the operations of these two entities?
2 - What questions would you have for the management of Entity B?
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