The Income Statement for Lifeline Products in Single-Step Format Follows

question 17

Essay

The income statement for Lifeline Products in single-step format follows. $\begin{array}{c}\text {Lifeline Products}\\ \text { Income Statement}\\ \text { For the Year Ended December 31, 2012}\\\begin{array}{lll} \text {Revenues:}\\ \text {Sales}\\ \text {Rent Income}\\\\ \text {Costs and Expenses:}\\ \text {Cost of Sales}\\ \text {Selling and Administrative Expenses}\\ \text {Interest Expense}\\ \text {Loss on the Sale of Plant Assets}\\\\ \text {Income Before Taxes}\\ \text {Income Taxes}\\ \text {Net Income}\\ \text {Earnings per Share}\end{array}\begin{array}{r}\\\$ 3,000,000 \\\underline{14,000} \\\$ 3,014,000 \\2,370,000 \\322,000 \\48,000 \\\underline{16,000} \\\underline{ \$ 2,756,000} \\\underline{\$ \quad 258,000} \\\underline{112,000} \\\underline{ \$ \quad 146,000} \\\underline{ \$ \quad 7,30}\end{array}\end{array}$

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.

---

Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or used up within one year or within the normal operating cycle of the business, whichever is longer.

Current Liabilities

A company's debts or obligations that are due within one year.

Quick Ratio

A measure of a company's ability to meet its short-term liabilities with its most liquid assets, providing insights into financial health.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business, whichever is longer.