Question Details

The income statement for Lifeline Products in single-step format



The income statement for Lifeline Products in single-step format follows.

Lifeline Products
Income Statement
For the Year Ended December 31, 2010
	
Revenues:	
   Sales	$3,000,000
   Rent Income	    14,000
	$3,014,000
Costs and Expenses:	
   Cost of Sales	2,370,000
   Selling and Administrative Expenses	322,000
   Interest Expense	48,000
   Loss on the Sale of Plant Assets	    16,000
	 $2,756,000
   Income Before Taxes	$  258,000
   Income Taxes	   112,000
   Net Income	$  146,000
   Earnings per Share	$     7.30

 
Required:

a.	Convert the statement to multiple-step format.
b.	Recompute net income with the unusual loss removed.
c.	Why may net income with the unusual loss removed be preferable to use for trend analysis?
d.	Speculate on why this loss is not considered extraordinary or as a disposal of a segment.





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