Reformulating Balance Sheet and Income Statement for an Asset Disposal

In 2015, Winnebago Industries recorded an impairment loss of $229,000 on its corporate plane. We wish to reformulate the companys income statement and balance sheet under the assumption that the plane had been used for the prior five yearssee Analyst Adjustments 6.2 for guidance. The companys tax rate is 30%.

a. For the income statement, identify with numbers the adjustments for each of the five years 2011-2015 for:

1. Loss on disposal

2. Depreciation

3. Tax expense
4. Net income

Use a negative sign with your answer to indicate an adjustment decreases the account.

Income Statement Adjustments				2011	2012	2013	2014	2015
Loss on disposal (reversal)
Tax Expense (reversal)
Net Income (reversal)
Depreciation
Tax Expense
Net income (adjustment)
Total net income (reversal + adjustment)

b. For the balance sheet, identify with numbers the adjustments for each of the five years 2011-2015 for:

1. Accumulated depreciation

2. Deferred tax
3. Retained earnings

Use a negative sign with your answer to indicate an adjustment decreases the account.

Balance Sheet Adjustments				2011	2012	2013	2014	2015
Accumulated depreciation
Deferred tax liability
Retained Earnings