Reference no: EM133020900
Question - Assume you have been handed the income statements below for analysis. Study the statements and then answer the questions below.
Income Statement - Entity A
Revenues $1,000,000
Expenses (400,000)
Gains (losses) that are not extraordinary (100,000)
Other gains (losses) 20,000
Income from continuing operations 520,000
Gains (losses) from discontinued operations 75,000
Extraordinary gains (losses) 20,000
Cum. effect of changes in accounting principles 10,000
Net income $625,000
Income Statement - Entity B
Revenues $1,000,000
Expenses (800,000)
Gains (losses) that are not extraordinary 0
Other gains (losses) 20,000
Income from continuing operations 180,000
Gains (losses) from discontinued operations (275,000)
Extraordinary gains (losses) 20,000
Cum. effect of changes in accounting principles 10,000
Net income $(65,000)
Required -
1) What observations would you make in comparing the operations of these two entities?
2) What questions would you have for the management of Entity B?
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