Question:
Bridge Company’s results for the year ended December 31, 2013, include the following material items:
Sales revenue $5,000,000
Cost of goods sold 3,000,000
Administrative expenses 1,000,000
Gain on sale of equipment 200,000
Loss on discontinued operations 400,000
Loss from earthquake damage (unusual and infrequent event) 500,000
Understatement of depreciation expense in 2012 caused by mathematical error 250,000
Bridge Company’s income from continuing operations before income taxes for 2013 is:
a. $700,000
b. $950,000
c. $1,000,000
d. $1,200,000
Answer:
d. Other than sales, COGS, and administrative expenses, only the gain or loss from disposal of
equipment is considered part of income from continuing operations. Income from continuing
operations was ($5,000,000 – 3,000,000 – 1,000,000 + 200,000) = $1,200,000.
Bridge Company’s results for the year ended December 31, 2013, include the following material items:
Sales revenue $5,000,000
Cost of goods sold 3,000,000
Administrative expenses 1,000,000
Gain on sale of equipment 200,000
Loss on discontinued operations 400,000
Loss from earthquake damage (unusual and infrequent event) 500,000
Understatement of depreciation expense in 2012 caused by mathematical error 250,000
Bridge Company’s income from continuing operations before income taxes for 2013 is:
a. $700,000
b. $950,000
c. $1,000,000
d. $1,200,000
Answer:
d. Other than sales, COGS, and administrative expenses, only the gain or loss from disposal of
equipment is considered part of income from continuing operations. Income from continuing
operations was ($5,000,000 – 3,000,000 – 1,000,000 + 200,000) = $1,200,000.
