Question
The following account balances were included in the adjusted trial balance of Aurora Retail Corporation at December 31, 2025.
| Sales Revenue | $2,450,000 | Officers Salaries (Administrative) | $142,600 |
| Sales Discounts | 42,000 | Insurance Expense (Administrative) | 18,900 |
| Sales Returns and Allowances | 68,000 | Depreciation on Building (Administrative) | 31,500 |
| Cost of Goods Sold | 1,404,000 | Utilities Expense (Administrative) | 26,700 |
| Sales Salaries and Commissions | 186,000 | Bad Debt Expense (Administrative) | 9,800 |
| Advertising Expense | 84,500 | Rent Revenue | 36,000 |
| Delivery Expense | 37,200 | Loss on Sale of Plant Assets | 14,500 |
| Depreciation of Sales Equipment | 24,300 | Interest Expense | 28,600 |
| Store Supplies Expense | 12,400 | Income Tax Expense | 106,500 |
Additional information:
- On September 30, 2025 Aurora sold its Home Furnishing Division. The division's operating loss for the nine months to disposal was $40,000 (before tax). The applicable tax saving is $12,000.
- The income tax rate on all items is 30%.
- 90,000 ordinary shares were outstanding throughout the year.
Instructions: Prepare a multi-step income statement for the year ended December 31, 2025 in accordance with IAS 1, including the results of discontinued operations (net of tax) and earnings per share — both for continuing operations and for net income, as IAS 33.66 requires on the face of the statement.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations
A discontinued operation is presented as a single net-of-tax amount on the face of the income statement, separately from continuing operations, with comparatives re-presented on the same basis. Confirm the component meets the definition before separating anything.
Common mistakes
- Leaving the discontinued result inside continuing operations line by line instead of presenting one net figure.
- Presenting the amount gross when IFRS 5 requires it net of tax.
- Failing to re-present the comparative period on the same basis.
Further readingIFRS 5: held for sale and discontinued operations