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I know the what the answers are but I don't know how toget them. Can you please explain the process? Thankyou.
Part VII. Discontinued Operations and Earnings per Share(11 points)
Todd Corporation had pre-tax income for 2017 of $2,500,000. OnDecember 31, 2017, Boyd disposed of a component of its businessthat represented a strategic shift in operation. That component hada Loss on Discontinued Operations of $450,000 (pre-tax). Boydreceived $1,000,000 net cash proceeds from the disposal of thatcomponent. The component had a net book value of $900,000. Boydpays taxes at a 30% rate. Boyd had 2,000,000 shares of common stockoutstanding during 2017, and also had 50,000 shares of 5% preferredstock, issued at $100 par value.
Required:
1. Prepare the DiscontinuedOperations portion of Todd Corporation’s 2017 Income Statement.Follow intraperiod tax allocation requirements. Show your workfor partial credit.
2. Prepare the Earnings perShare information as it would be presented on the IncomeStatement at December 31, 2017.
EPS:
Income from ContinuingOperations:
Loss from DiscontinuedOperations:
NetIncome:

Answer & Explanation Solved by verified expert

4.1 Ratings (643 Votes)

1)
Discontinued operations
Loss on Discontinued Operations	$450,000.00
Less: Applicable income tax ?reduction = $450,000 x 30%	-$135,000.00	$315,000.00
2)
Todd Corporation
Income Statement (Partial)
For the Year Ended December 31, 2017
Income from continuing operations? before income tax *	$2,600,000.00
Less: Income Tax Expense = $2,600,000 x 30%	-$780,000.00
Income from continuing operations		$1,820,000.00
Discontinued operations
Loss on Discontinued Operations	$450,000.00
Less: Applicable income tax ?reduction = $450,000 x 30%	-$135,000.00	$315,000.00
Net Income		$1,505,000.00
Less: Preffered Dividend = $50,000 x $100 x 5%		$250,000.00
Net Income available for Commonstock holders		$1,255,000.00
Per share of common stock:
Income from continuing operations = $1,820,000/2,000,000	$0.91
Discontinued operations, net of tax = $315,000/2,000,0000	-$0.16
Net Income = $1505000 /2,000,000	$0.75


*Computation of income from continuing operations ? before income tax:
As previously stated	$2,500,000.00
Gain on sale of equipment [$1,000,000 - $900,000)]	$100,000.00
Restated	$2,600,000.00

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In: AccountingI know the what the answers are but I don't know how toget them. Can...I know the what the answers are but I don't know how toget them. Can you please explain the process? Thankyou.Part VII. Discontinued Operations and Earnings per Share(11 points)Todd Corporation had pre-tax income for 2017 of $2,500,000. OnDecember 31, 2017, Boyd disposed of a component of its businessthat represented a strategic shift in operation. That component hada Loss on Discontinued Operations of $450,000 (pre-tax). Boydreceived $1,000,000 net cash proceeds from the disposal of thatcomponent. The component had a net book value of $900,000. Boydpays taxes at a 30% rate. Boyd had 2,000,000 shares of common stockoutstanding during 2017, and also had 50,000 shares of 5% preferredstock, issued at $100 par value.Required: 1. Prepare the DiscontinuedOperations portion of Todd Corporation’s 2017 Income Statement.Follow intraperiod tax allocation requirements. Show your workfor partial credit.2. Prepare the Earnings perShare information as it would be presented on the IncomeStatement at December 31, 2017.EPS:Income from ContinuingOperations: Loss from DiscontinuedOperations: NetIncome: