Foxy

Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.

2. Assume that by December 31, 2013, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $5,000,000. How would the presentation of discontin- ued operations be different from your answer to requirement 1?

3. Assume that by December 31, 2013, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $3,900,000. How would the presentation of discontin- ued operations be different from your answer to requirement 1?

For the year ending December 31, 2013, Micron Corporation had income from continuing operations before taxes of $1,200,000 before considering the following transactions and events. All of the items described below are before taxes and the amounts should be considered material.

1. During 2013, one of Micron’s factories was damaged in an earthquake. As a result, the firm recognized a loss

of $800,000. The event is considered unusual and infrequent.

2. InNovember2013,MicronsolditsWaffleHouserestaurantchainthatqualifiedasacomponentofanentity.

The company had adopted a plan to sell the chain in May 2013. The income from operations of the chain from

January 1, 2013, through November was $160,000 and the loss on sale of the chain’s assets was $300,000.

3. In 2013, Micron sold one of its six factories for $1,200,000. At the time of the sale, the factory had a carrying

value of $1,100,000. The factory was not considered a component of the entity.

4. In 2011, Micron’s accountant omitted the annual adjustment for patent amortization expense of $120,000. The error was not discovered until December 2013.