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1.

The trial balance of Kroeger Ltd included the following accounts as of December 31, 2022:
 
  Debits Credits
Sales revenue   8,200,000
Interest revenue   60,000
Gain on sale of investments   120,000
Unrealized gains on investments   140,000
Foreign currency translation adjustment 160,000  
Cost of goods sold 6,100,000  
Selling expenses 600,000  
Goodwill impairment loss 500,000  
Interest expense 30,000  
General and administrative expenses 500,000  

Kroeger had 300,000 ordinary shares outstanding throughout the year. Income tax expense has not yet been
accrued. The effective tax rate is 40%.

Required:

Prepare a 2022 single, continuous statement of profit or loss and other comprehensive income for Kroeger
Ltd. Use the function of expense method, and include earnings per share disclosures. 
 

Kroeger Ltd
Statement of Profit or Loss and Other Comprehensive Income
for the Year Ended December 31, 2022
Sales revenue   P8,200,000
Cost of goods sold   6,100,000
Gross profit   2,100,000
Operating expenses:    
 Selling P600,000  
 General and administrative 500,000  
 Goodwill impairment loss 500,000  
   Total operating expenses   1,600,000
Operating profit   500,000
Other income (expense):    
 Gain on sale of investments 120,000  
 Interest revenue 60,000  
 Interest expense (30,000)  
   Total other income, net   150,000
Profit before income taxes   650,000
Income tax expense   260,000
Net profit   390,000
Other comprehensive income:    
 Unrealized gains on investments, net 84,000  
of tax
 Foreign currency translation (96,000)  
adjustment, net of tax
 Total other comprehensive loss   (12,000)
Comprehensive income   P378,000
Earnings per share (390,000 / 300,000)  P1.30
2. The following statement of profit or loss items appeared on the adjusted trial balance of Foxworthy
Corporation for the year ended December 31, 2022 (P in thousands): sales revenue, P22,300; cost of goods
sold, P14,500; selling expenses, P2,300; general and administrative expenses, P1,200; dividend revenue
from investments, P200; interest expense, P300. Income taxes have not yet been accrued. The company's
income tax rate is 40% on all items of income or loss. These revenue and expense items appear in the
company's statement of profit or loss every year. The company's controller, however, has asked for your
help in determining the appropriate treatment of the following nonrecurring transactions that also occurred
during 2022 (P in thousands). All transactions are material in amount.

1. Investments were sold during the year at a loss of P300. Foxworthy also had unrealized holding losses of
P200 for the year on investments.
2. One of the company's factories was closed during the year. Restructuring costs incurred were P2,000.
3. During the year, Foxworthy completed the sale of one of its operating divisions that qualifies as a
component of the entity according to IFRS regarding discontinued operations. The division had incurred
operating profit of P800 in 2022 prior to the sale, and its assets were sold at a loss of P1,800.
4. A foreign currency translation gain for the year totaled P600.

Required: Prepare Foxworthy's single, continuous statement of profit or loss and other comprehensive
income for 2022, including earnings per share disclosures. Use the function of expense format. Two million
ordinary shares were outstanding throughout the year. 
 

Foxworthy Manufacturing Corporation


Statement of Profit or Loss and Other Comprehensive Income
for the Year Ended December 31, 2022 (P in thousands)

Sales revenue   P22,300


Cost of goods sold   14,500
Gross profit   7,800
Operating expenses:    
 Selling P2,300  
 General and administrative 1,200  
 Restructuring costs 2,000  
   Total operating expenses   5,500
Operating profit   2,300
Other income (expense):    
 Loss on sales of investments (300)  
 Interest expense (300)  
 Dividend revenue 200  
   Other income (expense)   (400)
Profit from continuing operations   1,900
before income taxes
Income tax expense   760
Profit from continuing operations   1,140
Discontinued operations:    
 Income from operations of    
discontinued component
   (including loss on disposal of P1,800) (1,000)  
 Income tax benefit 400  
 Loss from discontinued operations   (600)
Net profit   540
Other comprehensive income:    
 Unrealized holding loss from (120)  
investments, net of P80 tax
 Foreign currency translation 360 240
adjustment, net of P240 tax
Comprehensive income   P780
Earnings per share:    
Profit from continuing operations (1140/2,000)  P0.57
Discontinued operations (600)/ 2,000  (0.30)
Net profit   P0.27

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