Reformulating Balance Sheet and Income Statement for an Asset Disposal

In 2015, Winnebago Industries recorded an impairment loss of $462,000 on its corporate plane. We wish to reformulate the company's 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 company's 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 adjustmentdecreasesthe 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 adjustmentdecreasesthe account.

Balance Sheet Adjustments 2011 2012 2013 2014 2015 Accumulated depreciation

Deferred tax liability

Retained Earnings