Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Maher Inc. reported Income from Continuing Operations before taxes during 2 0 2 5 of $ 7 9 0 , 0 0 0 . Additional

Maher Inc. reported Income from Continuing Operations before taxes during 2025 of $790,000. Additional transactions occurring in
2025 but not considered in the $790,000 are as follows.
The corporation experienced an uninsured flood loss in the amount of $90,000 during the year.
At the beginning of 2023, the corporation purchased a machine for $54,000(salvage value of $9,000) that had a useful life
of 6 years. The bookkeeper used straight-line depreciation for 2023,2024, and 2025, but failed to deduct the salvage value in
computing the depreciation base.
Sale of securities held as a part of its portfolio resulted in a loss of $57,000(pretax).
When its president died, the corporation realized $150,000 from an insurance policy. The cash surrender value of this policy
had been carried on the books as an investment in the amount of $46,000(the gain is nontaxable).
The corporation disposed of its recreational division at a loss of $115,000 before taxes. Assume that this transaction meets
the criteria for discontinued operations.
The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this
change on prior years is to increase 2023 income by $60,000 and decrease 2024 income by $20,000 before taxes. The FIFO
method has been used for 2025. The tax rate on these items is 30%.
Prepare an income statement for the year 2025 starting with Income from Continuing Operations before taxes. Compute earnings per
share as it should be shown on the face of the income statement. Common shares outstanding for the year are 120,000 shares.
(Assume a tax rate of 30% on all items, unless indicated otherwise.)(Round earnings per share to 2 decimal places, e.g.1.48 and all other
answers to 0 decimal places, e.g.5,275.)
MAHER INC.
Income Statement (Partial)
For the Year Ended December 31,2025
Income before Income Tax
Income Tax
Income from Continuing Operations
Discontinued Operations
Loss on Disposal of Recreational Division
Net Income /(Loss)
$
Income from Continuing Operations
Loss on Disposal of Discontinued Operation
image text in transcribed

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Recommended Textbook for

Managerial Accounting A Focus on Ethical Decision Making

Authors: Steve Jackson, Roby Sawyers, Greg Jenkins

5th edition

324663854, 978-0324663853

More Books

Students also viewed these Accounting questions