Single Step Income Statement Discontinued Operations

Income tax applicable to loss on discontinued operations 23 460 and unrealized holding gain on available for sale securities net of tax 13 800.

Single step income statement discontinued operations. Hence the expression single step discontinued operations. Below is a multiple step income statement containing discontinued. Income tax applicable to income from continuing operations 172 040. See full answer below.

For the year 2020. A single step income statement offers a simple report of a business s profit using a single equation to calculate net income. Note that even in a single step format shown above the amount of the discontinued operations is separated out and added to the end of the income statement. Income from discontinued operations are reported at the bottom of the single step income statement net of income tax.

D the gross profit and income from operations. A loss on discontinued operations would be reduced by the income tax savings associated with the loss see net of tax. It represents the after tax gain or loss on sale of a segment of business and the after tax effect of the operations of the discontinued segment for the period. A discontinued operation is a separate major business division or geographical operation that the company has disposed of or is holding for sale.

A single step income statement is a format of income statement which uses just a single subtraction i e. C discontinued operations more than these are emphasized in the multiple step income statement. A multi step income statement on the other hand separates operational revenues and expenses from non operational ones and follows a three step process to calculate net income. The single step income statement emphasizes a total revenues and total expenses.

The following information was taken from the records of sheridan inc. The single step statement consists of just two groupings. Disclose the results from discontinued operations on the income statement or in accompanying notes. The total of all revenues incomes and gains minus the total of all expenses and losses.

B the various components of income from continuing operations. Discontinued operations are listed separately on the income statement because it s important that investors can clearly distinguish the profits and cash flows from continuing operations from those. In reporting revenues gains expenses and losses some companies often use a format known as the single step income statement instead of a multiple step income statement.