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Advance $Co.$ reported income from continuing operations before taxes during $2023$ of

$$2,500,000.$ Additional transactions occurring in $2023$ but not considered in the $$2,500,000$ are

as follows.

A gain of $$95,000($pretax$)$ as a result of selling securities from its investment portfolio.

A $$22,000$ loss before taxes as a result of operating the discontinued electric circuit division

during $2023.$

A loss of $$60,000$ before taxes as a result of disposing of its electric circuit division. Assume

that this transaction meets the criteria for discontinued operations.

A loss of $$110,000$ due to a flood without an insurance policy.

At the beginning of $2022,$ the corporation purchased a machine for $$200,000($salvage value

of $$20,000)$ that had a useful life of $10$ years. The bookkeeper used straight$-$line depreciation

for $2023$ but did not deduct the salvage value in computing the depreciation base.

The corporation decided to change its method of inventory pricing from weighted$-$average

cost to the FIFO method. The effect of this change on prior years is to increase $2021$ income

by $$50,000$ and decrease $2021$ income before taxes by $$10,000.$ The FIFO method has been

used from $2023$ onwards and presented in the cost of sales recorded for the year $2023.$

Instructions

$($a$)$ Compute income from continuing operations before taxes considering the information

provided.

$($b$)$ Prepare an income statement for the year $2023$ starting with income from continuing

operations before taxes.

$($c$)$ Compute earnings per share as it should be shown on the face of the income statement.

Ordinary shares outstanding for the year total $500,000.($Assume a tax rate of $20\%$ on all

items.$)$

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