(solution) Judgment Case 4–9 Income statement presentation; unusual items; comprehensive income Norse…

(solution) Judgment Case 4–9 Income statement presentation; unusual items; comprehensive income Norse…

Judgment Case 4–9 Income statement presentation; unusual items; comprehensive income Norse Manufacturing Inc. prepares an annual single, continuous statement of income and comprehensive income. The following situations occurred during the company’s 2016 fiscal year: 1. Restructuring costs were incurred due to the closing of a factory. 2. Investments were sold, and a loss was recognized. 3. Gains from foreign currency translation were recognized. 4. Interest expense was incurred. 5. A division was sold that qualifies as a separate component of the entity according to GAAP. 6. Obsolete inventory was written off. 7. The controller discovered an error in the calculation of 2015’s patent amortization expense. Required: 1. For each situation, identify the appropriate reporting treatment from the list below (consider each event to be material). a. As a component of operating income. b. As a nonoperating income item (other income or expense). c. As a discontinued operation. d. As an other comprehensive income item. e. As an adjustment to retained earnings. 2. Identify the situations that would be reported net-of-tax.