41) Why must discontinued operations and extraordinary items be reported separately from income from operations on the income statement?
42) In 2011, Axle Corporation sold its computer software division to Slight Technology. During the year of the sale, the division generated a profit of $425,000 before taxes and paid $183,750 in taxes. The division was sold for $4,000,000 more than its book value and the taxes on this gain were $870,000.
Required:
Show how these amounts would be reported on Axle's income statement for the year ended December 31, 2011.
43) In 2011, Bebe's Baby Boutique shut down its store in Paris. Operating losses for the year were $114,000, after a tax savings of $28,000. The store's furnishings and equipment were sold at a loss of $175,000, which was partially offset by a tax savings of $25,000.
Required:
Show how these amounts would be reported on Bebe's income statement for the year ended December 31, 2011.
44) In 2011, a flash flood in Death Valley destroyed Desert Dave's Watering Hole and its entire inventory. Net losses after insurance payments came to $34,000. The Watering Hole was able to claim a casualty loss on its tax return and got a tax reduction of $12,000.
Required:
Show how these amounts would be reported on the Watering Hole's income statement for the year ended December 31, 2011.
45) Ahram's Imports had an entire shipping container of oriental rugs seized by the government of Afghanistan in 2011. The insurance company refused to pay the estimated loss of $500,000, since it was caused by an "act of war." The loss will reduce Ahram's income taxes by $70,000.
Required:
Show how these amounts would be reported on Ahram's income statement for the year ended December 31, 2011.