Motor Corporation’s income statements for the years ended December 31, 2012, and 2011 included the following information before adjustments:   Table 1.  Income Statement of Motor Corporation in USD   2012 2011 Operating income $ 900,000 $ 600,000 Gain on sale of division $ 450,000 $ 0 Total  $1,350,000 $ 600,000 Provision for income taxes ($ 405,000) ($ 180,000) Net income $945,000 $ 420,000   On January 1, 2012, Motor Corporation agreed to sell the assets and product line of one of its operating divisions for $1,600,000. The sale was consummated on December 31, 2012, and it resulted in a gain on disposition of $450,000.  This division’s pre-tax net losses were $320,000 in 2012 and $250,000 in 2011.  The income tax rate for both years was 30%.   Starting with operating income (before tax), prepare revised comparative income statements for 2012 and 2011 showing appropriate details for gain (loss) from discontinued operations. Please include details to support your response.

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Chapter1: Financial Statements And Business Decisions
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Motor Corporation’s income statements for the years ended December 31, 2012, and 2011 included the following information before adjustments:

 

Table 1. 

Income Statement of Motor Corporation in USD

 

2012

2011

Operating income

$ 900,000

$ 600,000

Gain on sale of division

$ 450,000

$ 0

Total 

$1,350,000

$ 600,000

Provision for income taxes

($ 405,000)

($ 180,000)

Net income

$945,000

$ 420,000

 

On January 1, 2012, Motor Corporation agreed to sell the assets and product line of one of its operating divisions for $1,600,000. The sale was consummated on December 31, 2012, and it resulted in a gain on disposition of $450,000.  This division’s pre-tax net losses were $320,000 in 2012 and $250,000 in 2011.  The income tax rate for both years was 30%.

 

Starting with operating income (before tax), prepare revised comparative income statements for 2012 and 2011 showing appropriate details for gain (loss) from discontinued operations. Please include details to support your response.

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