Trayer Corporation has income from continuing operations of $290,000 for the year ended December 31, 2020. It also has the following items (before considering income taxes).
1. An unrealized loss of $80,000 on available-for-sale securities.
2. A gain of $30,000 on the discontinuance of a division (comprised of a $10,000 loss from operations and a $40,000 gain on disposal).
3. A correction of an error in last year’s financial statements that resulted in a $20,000 understatement of 2016 net income.
Assume all items are subject to income taxes at a 20% tax rate. Prepare a statement of comprehensive income, beginning with income from continuing operations. TRAYER CORPORATION Partial Statement of Comprehensive Income choose the accounting period.Solution: Loss from operations = $10,000 × 20% = $2,000 ($10,000 - $2,000 = $8,000)Gain from disposal = $40,000 × 20% = $8,000 ($40,000 - $8,000 = $32,000)Unrealized holding loss on available-for-sale securities = $80,000 × 20% = $16,000 ($80,000 - $16,000 = $64,000)(Gains and losses from discontinued operations and other comprehensive income should be reported net of their income tax effects)

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Abiolataiwo2015go Abiolataiwo2015go · Answer 1

Answer:

$250,000

Explanation:

Preparation of the statement of comprehensive income

TRAYER CORPORATION Statement of Comprehensive Income for the year ended 31 December 2017

Income from continuing operations $290,000

Discontinued operations:

Less Loss of operation of Discontinue Division, net of tax ($8,000)

($40,000 × 20% )

Gain on sales of Discontinued Division, net of tax $32,000

($40,000 - $8,000 )

Net income $314,000

($290,000+$8,000+$32,000)

Less Unrealized loss on available-for-sale securities, net of tax $64,000

[$80,000-($80,000 × 20%)]

Comprehensive income $250,000

($314,000-$64,000)

Therefore the comprehensive income will be $250,000