Esquire Comic Book Company had income before tax of $1,000,000 in 2013 before considering the following material items:

Esquire Comic Book Company had income before tax of $1,000,000 in 2013 before considering the following material items:

 

1.	Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting principles. The before-tax loss on disposal was $350,000. The division generated before-tax income from operations from the beginning of the year through disposal of $500,000. Neither the loss on disposal nor the operating income is included in the $1,000,000 before-tax income the company generated from its other divisions.
2.	The company incurred restructuring costs of $80,000 during the year.

 

Explanation:  Income from operations of discontinued component (including loss on disposal of $350,000) = 150,000    Income from continuing operations:          Income before considering additional items $ 1,000,000    Decrease in income due to restructuring costs   (80,000 )         Before-tax income from continuing operations   920,000    Income tax expense (40%)   (368,000 )         Income from continuing operations $ 552,000