AC300's Unit 4 income statement preparation separates a composite fitness-club chain's discontinued therapy division from a storm loss that stays inside continuing operations, with earnings per share for each layer. Searches like "ac 300 unit 4 assignment example", "ac300 unit 4 sample" and "ac300 unit 4 example" land here.
What a finished AC300 Unit 4 income statement preparation looks like
A multiple-step statement for one fiscal year, running from membership and training revenue down through operating expenses to income from continuing operations before tax of 1,240,000 dollars. The 150,000-dollar storm loss sits inside that figure on a line of its own, labeled unusual and shown before tax like any other operating item. Income tax at 21 percent follows, 260,400, leaving income from continuing operations of 979,600. Then comes the discontinued operations section, one caption with two parts: the therapy division's operating loss of 180,000 and a 420,000 gain on its sale, 240,000 combined before tax and 189,600 after it. Net income closes at 1,169,200. Beneath, earnings per share on 400,000 shares appears in three lines: 2.45 from continuing operations, 0.47 from the discontinued division, 2.92 in total. A note describes the sale.
How a AC300 Unit 4 example is structured
Everything above income from continuing operations describes the business that will still exist next year. That is why the storm loss stays up there, pretax, even though it will probably never recur: it is unusual in nature, yet it happened to the clubs the company is keeping. The therapy division moves below the line because its sale is a strategic shift with a major effect on operations, the test ASC 205-20 applies, and its results are reported net of their own tax. A small working schedule beside the statement splits the year's tax between the two sections. The earnings per share lines follow the same split. A change in the estimated life of exercise equipment, also in the facts, appears nowhere on the face; a note explains that it was applied prospectively.
Continuing operations, storm included
Membership and training revenue, operating expenses, and a separate pretax line for the 150,000-dollar storm loss. The subtotal before tax is 1,240,000 dollars.
Tax split between two sections
A working schedule allocates the year's tax: 260,400 to continuing operations and 50,400 to the division sold. Each section then carries its own tax figure.
The therapy division, below the line
Operating loss of 180,000 and a sale gain of 420,000 under one caption, reported at 189,600 after tax. Nothing about the division remains in operating expenses.
Three earnings per share figures
Continuing operations 2.45, discontinued operations 0.47, net income 2.92, each computed on 400,000 weighted shares and printed on the face of the statement.
A revised estimate kept off the face
The longer life for exercise equipment reduces this year's depreciation without any separate line. A short note states the change and its effect on income.
Where marks go in AC300 Unit 4
Most of the marks lost on this statement trace back to the storm loss. Moving it below continuing operations, or reporting it net of tax as though it were an extraordinary item, applies a category the FASB removed in 2015, and graders in most sections mark it as outdated treatment. Leaving the therapy division's results mixed into operating expenses is the opposite error and costs as much, since separate presentation of the disposed component is the unit's point. Applying one tax figure to the entire pretax total instead of allocating it between sections throws off both subtotals. Earnings per share shown only for net income loses the lines the standard requires on the face. A revised depreciation estimate shown as a restatement draws a further deduction, as does a missing note on the sale.
Get a AC300 Unit 4 example written to your instructions
Unit 4 problems vary mostly in which unusual items they plant, which makes the complete fact list the key input, along with the instructions and rubric. Each item is placed where the standard puts it, tax allocated section by section, with the note and earnings per share lines included. A first custom sample is free and is back within 24-48h.
AC300 Unit 4 questions, answered
Why is the storm loss not net of tax when the discontinued division is?
Because only discontinued operations are presented net of tax on the face of the statement. An unusual or infrequent item remains part of continuing operations and is shown before tax, with its tax effect folded into the provision for the year. Extraordinary items once received net-of-tax treatment too, but that category was eliminated, so a storm loss now sits with the other operating lines.
Does every sale of a business unit count as discontinued operations?
No. The disposal has to represent a strategic shift with a major effect on operations and financial results, such as leaving a line of business or a major geographic area. Selling one club out of forty would usually not qualify. The therapy division qualifies in this problem because the chain leaves health care entirely, a point the note makes explicit.
Can the statement be single-step instead of multiple-step?
Some AC300 problems allow it, and a single-step format still has to show continuing and discontinued operations separately along with the earnings per share lines. Most Unit 4 prompts ask for multiple-step because the intermediate subtotals, operating income and income before tax, show where unusual items sit. Whatever format the instructions name is used, with multiple-step as the default.