Reference no: EM132906649

Amber Corporation reported income from continuing operations of $1,600,000 (after taxes) for the fiscal year ended December 31, 2020. The following information, which has not yet been considered or included in the above figure, has been revealed as well:

1. On December31, 2020, Amber adopted the FIFO cost method of inventory valuation. The company had previously used the average method. The change increased income for 2020 by $50,000 (pre-tax) and the cumulative effect of the change on prior years' income was a $60,000 (pre-tax) increase.

2. Some equipment was sold for $100,000 cash during the year at a time when its book value was $140,000. (Depreciation has been correctly recorded.)

3. Amber decided to discontinue its microchip division in 2020. During the current year, the loss on the disposal of this segment was $250,000 (before applicable taxes).

Instructions

Problem 1: Present in good form the income statement of Amber Corporation for 2020 starting with "Income from continuing operations." Assume that Amber's tax rate is 20% and that 200,000 common shares were outstanding during the year.