QUESTION '1 Sparky, Inc. is preparing its 2017 financiai statements. The company's accountant calculated Income from Continuing Operations to be $600,000, but upon further review is not certain this number is accurate. Sparky has a corporate income tax rate of 40%. Additionally, the company reports only one year offinancial data on the face ofthe financial statements. All amounts listed are pretax unless otherwise noted. After reviewing the following information, determine the appropriate adjustments, ifany, to Income from Continuing Operations. Once you have determined the CORRECT Income from Continuing Operations, complete the remainder of the Income Statement for any Irregular Items and EPS disclosures. 1. On January 1, 2014, Sparky purchased a machine for $80,000 with a salvage value of $20,000 and useful life ofeight years which was depreciated using the straight-line method. During 2017, Sparky decided to change to doubledecliningbalance method. The $600,000 Income from Continuing Operations had aiready been calculated using the straightline depreciation method. Determine the correct ADJUSTMENT to Income from Continuing Operations (ICU) for Depreciation Expense in 201?. Ifyou need to increase ICO, enter your answer as a positive number; ifyou need to decrease ICO, enter your answer as a negative number using ( ) parenthesis. If you determine that Depreciation Expense for 201? was calculated correctly and therefore does not require an adjustment to ICO, enter NE. Adjustment for Depreciation Expense (2017}: $[Blank_1] QUESTION 2 Continuing with the information presented in #1 above, Sparky Inc has ICO of$600,000 and a corporate tax rate of40%. Determine if ICO should be adjusted based on the foilowing information: 2. Sparky had an unrealized translation loss from foreign currency of $12,000 (pretax) that was included in calculating the $600,000 income from continuing operations. Adjustment for Translation Loss from Foreign Currency: $[Blank_2] Ifyou want to increase ICO, enter your answer as a positive number: ifyou want to decrease ICO, enter your answer as a negative number using ( parenthesis. Ifyou feel this transaction was correctly reported and would not need an adjustment to ICO, enter NE. QUESTION 3 Continuing with the information presented in #1 above, Sparky Inc has Income from Continuing Operations (ICO) of $600,000 and a corporate tax rate of40%. Determine if ICO should be adjusted based on the following information: 3. During 2017, Sparky closed one of its stores for a preetax loss of $50,000. This store closure did not qualifyas a component ofthe entity, nor did it create a strategic shift in the operations of the entity. Therefore, it should not be treated as Discontinued Operations. The $50,000 restructuring charges were excluded in determining the $600,000 income from continuing operations. Adjustment for Restructuring Charges $[Blank73] To add to ICC), use a positive number; to subtract from ICC), enter a negative number using ( ) parenthesis; if no adjustment is necessary, enter NE. QUESTION4 Continuing with the information presented in #1 above, Sparky Inc has Income from Continuing Operations (ICO) of $600,000 and a corporate tax rate of40%. Determine if ICO should be adjusted based on the following information: 4. On April 1. 2016 Sparky paid $24,000 for two years rent on office space and atthe time debited a nominal account, Rent Expense. No adjusting or correcting entries were made for this transaction in 2016 or 201?. Adjustment for Rent Expense in 2017: $ Will this error require a retrospective adjustment of income from a prior period? Enter your answer as either Yes or No QUESTION5 5. Sparky sold investments during the year that resulted in a pre-tax loss of $18,000. Sparky also had unrealized gains on Available for Sale securities of $20,000 (pre-tax). Both ofthese transactions were exciuded in the $600,000 Income from Continuing Operations calculation. Adjustment for gainsllosses on investments: $[Amount71] QUESTION6 Using the adjustments you made in items 1-5 above. determine the CORRECTED Income From Continuing Operations. $[Biank7'l] QUESTION? Determine Sparky's EPS for Net Income based on the following: (round to the nearest whole cent.) - Dividends of $90,000 were declared on December 10, 201?; to be paid on January 10, 2018. Ofthese dividends, $40,000 were for preferred shareholders. The average common shares outstanding during 2017 were 100,000. QUESTION 8 Referring to the information presented above in questions 16. determine Sparky's Comprehensive Income as of year end: $[Blank71] QUESTION 9 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (2) QUESTIONS: On May 1, 2016, Bradley Corporation decided to sell one of its componentsiat qualied as a discontinued operation. This component had an operating loss of $75,000 during 2016. At December31, 2016, Bradleyfsyearend, it estimated the Component's fair value to be $500,000 and its net bookvalue to be $480,000. Bradley also emmated the disposal costs would be $?0,000. The sale ofihe component was completed on March 1, 201? for net cash proceeds of $440,000. The component had an operating loss of $21,000 during the rsttwo months of 2017. Assume that all the amounts are pretax and that Bradlefstax rate for all yearswas 35%. For your answers, ifthere isa Loss, indicate in your answer using parenthesisl: }. For example, ifthere was a Loss on Disc Ops {net} of $20,000, record your answer asi20000}. Required: Determine the Loss on Discontinued Operations (net of tax)*as of December 31, 2016:3{Biank_1} 'This answer shoaia' inciaa'e BOTH the Loss from Operations of the Discontinued Component {net of tax) for '16 as weh' as the impairment ioss {net of tax), if my QUESTION 10 Using the information presented in question #9 above, determine the following for 2017: Discontinued Operations: Loss on Operations of Discontinued Component{net of tax) |$ I GainlLoss 0n Disposal of Discontinued Component [net of tax] $ GainfLoss on Discontinued Operations [net] |$_Blank 1 | Required: Determine the Gaini'Loss on Discontinued Operations {net of tax} $[Blank_1] *use parenthesis {} for your answer if there is a loss