Answers
WN-1
Income from operations before tax
| Particulars | Amount($) |
| 1.Income from cotinued operations before tax | 2300000 |
| 2.Gain from sale of securities | 107000 |
| 3.Loss due to fire | (132000) |
| 4.Depreciation**($21000-($3000*3)) | (12000) |
| 5.Effect of change of inventory policy*($50000-$24000) | 26000 |
| 6.Total (1 to 5) | 2289000 |
*Since the eaarlier period figures are not given,it is assumed that the earliest period practicable to make effect of change in accounting policy would be 2017.
**It isassumed that the previous year practicable as 2017, in the absence of figures of previous years.
In actual sense the change in accounting policy and errors both require us to make necessary changes retrospectively, which means to make changes as if the policies are there from the start period and as if error has been immediately recognised and made necessary changes.
WN-2
Tax Expense
| Particulars | Amount($) |
| 1.Income before taxes (WN-1(6)) | 2289000 |
| 2.Tax benefit due to excess depreciation($6000*30%) | 1800 |
| 3.Tax benefit on loss from Discontinued Operations ($24000*30%) | (7200) |
| 4.Tax benefit on disposal from Discontinued Operations ($66000*30%) | (19800) |
| 3.Tax Expense([1+2+3+4]*30%) | 679140 |
| SAGE HILL INC Income Statement (partial)for the year ended 31 December,2017 |
| Income from Continuing Operations before Income tax(WN-1) | $2289000 |
| Income Tax (WN-2) | $679140 |
| Income from Continuing Operations | $1609860 |
| Dicontinued Operations |
| Loss on opeartion of discontinued Operations net of tax ($24000*70%) | $16800 |
| Loss on disposal of discontinued Operations net of tax ($66000*70%) | $46200 |
| Net Income($1609860-$16800-$46200) | $1546860 |
| Per Share of Common stock of 450000 shares |
| Continued Operations($1609860/450000) | $3.57 |
| Discontinued Operations($63000/450000) | ($0.14) |
| Earnings per share ($1546860/450000) | $3.43 |
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