Each of the following items was found on the financial stateme Company for the year ended December 31, 2007:
Net income from continuing operations $136,500
Gain on the sale of a discontinued segment, net of taxes of $42,000 140,000
Loss from operation of discontinued segment, net of taxes of $24,000 -80,000
Gain on sale of land 65,000
Extraordinary loss, net of taxes of $6,000 -20,000
Required
a. For the items listed above, indicate the financial statement and appropriate section, where applicable, on which each would appear.
b. Provide a description of each item and give as many details of each item's financial statement presentation as possible.
c. Based on the data provided, what is Hartfield Company's tax rate?
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a. To indicate the financial statement and appropriate section for each item:
Net income from continuing operations - This item would appear on the Income Statement, specifically in the "Net Income from Continuing Operations" section.
Gain on the sale of a discontinued segment - This item would also appear on the Income Statement, specifically in the "Gain on Sale of Discontinued Segment" section.
Loss from operation of discontinued segment - This item would appear on the Income Statement, specifically in the "Loss from Operation of Discontinued Segment" section.
Gain on sale of land - This item would also appear on the Income Statement, specifically in the "Gain on Sale of Land" section.
Extraordinary loss - This item would appear on the Income Statement, specifically in the "Extraordinary Loss" section.
b. A description and financial statement presentation details for each item:
Net income from continuing operations - This represents the income earned from the company's ongoing operations. It is calculated by subtracting all expenses and taxes from the company's total revenue. This item is presented on the Income Statement as a positive value under the "Net Income from Continuing Operations" section.
Gain on the sale of a discontinued segment - This represents the profit realized from selling a discontinued segment of the company's operations. It is calculated by subtracting the cost or book value of the discontinued segment from the sale price. This item is presented on the Income Statement as a positive value under the "Gain on Sale of Discontinued Segment" section.
Loss from operation of discontinued segment - This represents the loss incurred from operating a discontinued segment of the company's operations. It is calculated by subtracting the revenue generated from the discontinued segment from its operating expenses. This item is presented on the Income Statement as a negative value under the "Loss from Operation of Discontinued Segment" section.
Gain on sale of land - This represents the profit realized from selling land. It is calculated by subtracting the cost or book value of the land from the sale price. This item is presented on the Income Statement as a positive value under the "Gain on Sale of Land" section.
Extraordinary loss - This represents a significant loss that is unusual or infrequent in nature and not related to the company's ordinary operations. It is presented separately on the Income Statement as a negative value under the "Extraordinary Loss" section.
c. Based on the data provided, we cannot determine Hartfield Company's tax rate directly. The information only mentions the taxes associated with certain items, and not the overall tax rate of the company. To determine the tax rate, we would need additional information such as the total tax expense and the company's taxable income.