Question:
Duke Company’s records show the following account balances at December 31, 2013:
Income tax expense has not yet been determined. The following events also occurred during 2013. All
transactions are material in amount.
1. $300,000 in restructuring costs were incurred in connection with plant closings.
2. The company operates a factory in South America. During the year, the foreign government took over
(expropriated) the factory and paid Duke $1,000,000, which was one-fourth of the book value of the
assets involved. The factory is not a component of the entity and the event is considered to be unusual and
infrequent.
3. Inventory costing $400,000 was written off as obsolete. Material losses of this type are not considered
to be unusual.
4. It was discovered that depreciation expense for 2012 was understated by $50,000 due to a
mathematical error.
5. The company experienced a foreign currency translation adjustment loss of $200,000 and had
unrealized gains on investments of $180,000.
Required:
Prepare a single, continuous multiple-step statement of comprehensive income for 2013. The company’s
effective tax rate on all items affecting comprehensive income is 40%. Each component of other
comprehensive income should be displayed net of tax. Ignore EPS disclosures.
Answer:
Duke Company’s records show the following account balances at December 31, 2013:
Income tax expense has not yet been determined. The following events also occurred during 2013. All
transactions are material in amount.
1. $300,000 in restructuring costs were incurred in connection with plant closings.
2. The company operates a factory in South America. During the year, the foreign government took over
(expropriated) the factory and paid Duke $1,000,000, which was one-fourth of the book value of the
assets involved. The factory is not a component of the entity and the event is considered to be unusual and
infrequent.
3. Inventory costing $400,000 was written off as obsolete. Material losses of this type are not considered
to be unusual.
4. It was discovered that depreciation expense for 2012 was understated by $50,000 due to a
mathematical error.
5. The company experienced a foreign currency translation adjustment loss of $200,000 and had
unrealized gains on investments of $180,000.
Required:
Prepare a single, continuous multiple-step statement of comprehensive income for 2013. The company’s
effective tax rate on all items affecting comprehensive income is 40%. Each component of other
comprehensive income should be displayed net of tax. Ignore EPS disclosures.
Answer:
