Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 4 - Income Statement and Related Information - Review and Practice - Questions - Page 180: 18


Perlman Land Development, Inc. and Sheehan Manufacturing should not report the sale in the same way. Perlman should report revenues of 160, 000 and expenses of 100,000 (70,000+30,000). On the other hand, Sheehan manufacturing should record a gain of 60,000 (160,000-100,000), because the transaction was of incidental activity.

Work Step by Step

However, it is important to note that the different classification doesn't affect the net income, which constantly remains at 60,000.
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