Macroteledyne,Inc

question 4

Essay

Macroteledyne,Inc.'s income from continuing operations before taxes was $2,000,000 for the year ended December 31,2010.The company's effective tax rate is 40% and during the year the following events also took place:
The company sold one of its divisions at a gain of $250,000.The division had an operating loss of $185,000 through the date of disposal.
A flood destroyed a warehouse owned by the company.The amount of the uninsured loss was $375,000.This was the first flood ever in this area.
Required: Prepare the lower portion of the income statement,from "income from continuing operations before taxes" through "net income",for the year ended 12/31/10.

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Definitions:

Common-size Percent

A financial analysis tool that expresses each item in a financial statement as a percentage of a base amount, facilitating comparison across different periods or companies.

Total Assets

The sum of all resources owned by a company, valued in monetary terms, which include buildings, equipment, inventory, and cash.

Cash

A form of liquid asset that includes currency and other assets that are readily convertible to known amounts of cash and can be used to settle debts, purchases, or other transactions.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.