Answer (D) is correct . Revenue is a component of income from continuing operations. Results of discontinued operations is a classification in the income statement separate from continuing operations. The cumulative effect of a change in accounting principle is not reported in the income statement. Hence, total revenues were $201,900 ($215,400 – $12,000 results from discontinued operations – $1,500 cumulative-effect type change). Alternatively, total revenues consist of net sales of $187,000, plus interest revenue of $10,200, plus gain on sale of equipment (which is not an extraordinary item) of $4,700.
Answer (A) is incorrect because The amount of $217,800 equals $215,400 reported total revenues, plus the $2,400 loss from operations of the segment.
Answer (B) is incorrect because The amount of $215,400 improperly includes the results from discontinued operations and the cumulative-effect type change.
Answer (C) is incorrect because The amount of $203,700 improperly subtracts interest revenue and does not adjust for the results from discontinued operations.
|
In the revenues section of the Year 3 income statement, Hopkins should have reported total revenues of