Answered step by step
Verified Expert Solution
Question
1 Approved Answer
P 3 . 5 ( LO 1 , 3 ) ( Unusual or Infrequent Items ) Presented below is a combined single - step income
PLO Unusual or Infrequent Items Presented below is a combined singlestep income
and retained earnings statement for Nerwin Company for
Additional facts are as follows.
"Selling, general, and administrative expenses" for included a charge of $ that was
usual but infrequently occurring.
"Other, net" for included a loss on sale of equipment of $
"Adjustment required for correction of an error" was a result of a change in estimate useful life of
certain assets reduced to years and a catchup adjustment made
Nerwin Company disclosed earnings per common share for net income in the notes to the financial
statements.
Instructions
Determine from these additional facts whether the presentation of the facts in the Nerwin Company
income and retained earnings statement is appropriate. If the presentation is not appropriate, describe
the appropriate presentation and discuss its theoretical rationale. Do not prepare a revised statement.
PLO Retained Earnings Statement, Prior Period Adjustment Below is the Retained
Earnings account for the year for Acadian Corp.
Retained earnings, January
$
Add:
Gain on sale of investments net of tax
$
Net income
Refund on litigation with government, related to the year
net of tax
Recognition of income earned in but omitted from income
statement in that year net of tax
Deduct:
Loss on discontinued operations net of tax
Writeoff of goodwill net of tax
Cumulative effect on income of prior years in changing from LIFO to
FIFO inventory valuation in net of tax
Cash dividends declared
Retained earnings, December
$
Instructions
a Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the
type mentioned above. FIFO inventory was used in to compute net income.
b State where the items that do not appear in the corrected retained earnings statement should be
shown.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started