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LOS a: Distinguish among the various definitions of earnings (e.g., EBITDA, operating earnings, net income, etc.)
Q1. Duster Corporation’s year-end income statement reported the following:
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Operating income |
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$187,000 |
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Results from discontinued operations: |
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Loss from segment operations |
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(net of $1,440 tax effect) |
($2,160) |
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Gain on segment disposal |
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(net of $8,640 tax effect) |
12,960 |
10,800 |
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Gain on sale of equipment |
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3,400 |
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Interest expense |
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12,400 |
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Extraordinary loss |
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(net of $2,200 tax benefit) |
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3,300 |
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Income tax expense |
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71,200 |
Calculate Duster’s income from continuing operations for the year.
A) $103,500.
B) $106,800.
C) $114,300.
Q2. Galaxy Company recognized a restructuring charge in its year-end income statement. Similar restructuring charges have
occurred in the past. In addition, Galaxy recognized an extraordinary loss. Galaxy uses the term “operational earnings” when
discussing its financial results. According to Galaxy, “operational earnings” excludes special nonrecurring transactions such as
restructuring charges, discontinued operations, and extraordinary items. Should the restructuring charge and extraordinary loss
be included or excluded from “operational earnings” for analytical purposes?
A) Both are included.
B) One one is included.
C) Both are excluded.
Q3. Which of the following statements about financial disclosures are correct or incorrect?
Statement #1: Transitory earnings are usually more important to investors than permanent earnings.
Statement #2: Pro-forma earnings are usually prepared in accordance with generally accepted accounting principles.
A) Only statement #1 is incorrect.
B) Only statement #2 is incorrect.
C) Both are incorrect.
Q4. As compared to an operating lease, which of the following best describes the impact of a capital lease on earnings before
interest and taxes (EBIT) and operating cash flow (OCF) according to U.S. generally accepted accounting principles?
EBIT OCF
A) Lower Higher
B) Higher Lower
C) Higher Higher
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发表于 2009-3-3 09:09
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