Todd Corporation had pre-tax income for 2017 of $2,500,000. OnDecember 31, 2017, Boyd disposed...

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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.
1. Prepare the Discontinued Operations portion of ToddCorporation’s 2017 Income Statement. Follow intraperiod taxallocation requirements. Show your work for partialcredit.
2. Prepare the Earnings per Share informationas it would be presented on the Income Statement at December 31,2017. (include: income from continuing operations, loss ondiscontinued operations, and net income)
please show work!

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4.2 Ratings (514 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: AccountingTodd Corporation had pre-tax income for 2017 of $2,500,000. OnDecember 31, 2017, Boyd disposed of...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.1. Prepare the Discontinued Operations portion of ToddCorporation’s 2017 Income Statement. Follow intraperiod taxallocation requirements. Show your work for partialcredit.2. Prepare the Earnings per Share informationas it would be presented on the Income Statement at December 31,2017. (include: income from continuing operations, loss ondiscontinued operations, and net income)please show work!