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Sagot :
The preparation of the income statement for the year ended December 31, 2020, for Maher Inc., is as follows:
Maher Inc.
Income Statement
For the year ended December 31, 2020:
Income from continuing operations before taxes $790,000
2. Overstated depreciation expense 4,500
6. Net change in profit (inventory method) 40,000 44,500
Adjusted income from continuing operations $834,500
5. Loss from discontinued operations (115,000)
Adjusted income after discontinued operations $719,500
Other events:
1. Uninsured flood loss ($90,000)
3. Loss from sale of securities (57,000) (147,000)
Adjusted taxable income $572,500
Taxes (30%) (171,750)
4. Non-taxable Gain from cash surrender value 104,000
Adjusted net income after taxes $504,750
What is the adjusted net income?
The adjusted net income takes into account all the tax-deductibles and income from all sources.
Data and Calculations:
2020 Income from continuing operations before taxes = $790,000
Transactions:
1. Uninsured flood loss = $90,000
2. Value of machine = $54,000
Salvage value = $9,000
Depreciable amount = $45,000 ($54,000 - $9,000)
Estimated useful life =6 years
Annual straight-line depreciation expense = $7,500 ($45,000/6)
Overstated depreciation expense = $4,500 ($1,500 x 3)
3. Loss from sale of securities = $57,000
4. Non-taxable Gain from cash surrender value = $104,000 ($150,000 - $46,000)
5. Loss from discontinued operations = $115,000
6. Net change in inventory method = $40,000 increase ($60,000 - $20,000)
Tax rate = 30%
Learn more about income from continuing operations at https://brainly.com/question/5007419
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