7.
In 2017, the Kross Company reports income from continuing operations before income tax of $500,000.
Additional transactions not considered in the $500,000 are as follows.
• In 2017, Kross Corp. had a gain on the sale of equipment of $50,000 before taxes.
• The company discontinued operations of one of its subsidiaries during the current year. Assume that this
transaction meets the criteria for discontinued operations. The gain from operations of the discontinued
subsidiary was $100,000 before taxes; the loss from disposal of the subsidiary was $30,000 before taxes.
Analyze the above information and answer the following questions. Assume a total effective tax rate of 40% on all items.
(a) What is income/(loss) from continuing operations for Kross in 2017?
(b) What is net income/(loss) from discontinued operations for Kross in 2017?
8. On June 11, 2021, Boyar Construction entered into a long-term construction contract to build a monument to
accounting for $2,700,000 million. The expected completion date is June 1, 2023, just in time for graduation.
Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows (S in
millions):
2021
2022
2023
Costs incurred during the year
$ 500,000 $700,000 $700,000
Estimated costs to complete as of December 31 1,000,000 600,000 —
a) How gross profit will Boyar report in its 2021, 2022, and 2023 income statements related to this contract assuming it
recognizes revenue over time according to percentage of completion?
2021 Gross profit
2022 Gross profit
2023 Gross Profit
