Milton Company Has Income from Continuing Operations of $480,000 for the Year

question 167

Essay

Milton Company has income from continuing operations of $480,000 for the year ended December 31, 2014. It also has the following items (before considering income taxes):
(1) A gain of $70,000 on the discontinuance of a major division.
(2) A correction of an error in last year's financial statement that resulted in a $90,000 overstatement of 2013 net income.
Assume all items are subject to income taxes at a 30% tax rate.
Instructions
(a) Prepare an income statement, beginning with income from continuing operations.
(b) Indicate the statement presentation of any item not included in (a) above.

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Definitions:

Reverse Stock Split

A decrease in the number of a corporation's outstanding shares, which increases the share price proportionally.

Market Value

The cost at which you can currently buy or sell a service or asset in the open market.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which may not necessarily reflect its market value.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the overall value of the company remains the same.