| Course | ACC-2010 Intermediate Accounting I |
|---|---|
| Module | Module 3 |
| Paper type | Written Assignment 3: income statement, comprehensive income, cash flows and revenue recognition |
| Length | About 703 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Bachelor of Science in Business Administration |
| Updated | October 2026 |
Free sample paper for ACC 2010 Module 3
Kittatinny Outdoor Gear, Inc.: Discontinued Operations, Comprehensive Income, Operating Cash Flows and a Three-Part Bundle
Student Name
Bachelor of Science in Business Administration, Thomas Edison State University
ACC-2010: Intermediate Accounting I
Mentor Name
Month Day, Year
Kittatinny Outdoor Gear, Inc.: Discontinued Operations, Comprehensive Income, Operating Cash Flows and a Three-Part Bundle
Introduction
In 2025 Kittatinny sold its kayak rental division, a separate line of business with its own customers and results, to focus on manufacturing. That sale changes how the income statement must be presented. This assignment prepares the year's income statement and statement of comprehensive income, reconciles net income to operating cash flow and applies the revenue recognition model to a new product bundle.
Part A: Income Statement With Discontinued Operations
The division lost $40,000 from operations before its sale and $20,000 on the sale itself, a $60,000 pretax loss. At the 25% rate, the tax benefit is $15,000, so the net loss is $45,000. Reporting it separately, below continuing operations and net of its own tax, lets users forecast the business that remains (Spiceland et al., 2020). The division qualified because its sale was a strategic shift with a major effect on operations: it had its own customers, staff and results that could be distinguished from manufacturing. A single closed store or a discontinued tent model would not qualify, and its results would stay in continuing operations.
| Kittatinny Outdoor Gear, Inc., income statement for 2025 | Amount |
|---|---|
| Sales revenue | $2,450,000 |
| Cost of goods sold | 1,520,000 |
| Gross profit | 930,000 |
| Selling, general and administrative expenses | 560,000 |
| Operating income | 370,000 |
| Interest expense | (30,000) |
| Gain on sale of investments | 10,000 |
| Income from continuing operations before income taxes | 350,000 |
| Income tax expense at 25% | 87,500 |
| Income from continuing operations | 262,500 |
| Discontinued operations: loss from the kayak division, including a $20,000 loss on disposal, net of $15,000 tax benefit | (45,000) |
| Net income | $217,500 |
| Earnings per share on 100,000 shares: continuing operations | $2.63 |
| Discontinued operations | (0.45) |
| Net income | $2.18 |
Part B: Comprehensive Income
Kittatinny holds a portfolio of debt securities classified as available for sale. Their fair value rose by $16,000 during the year. Unrealized gains on such securities bypass net income and are reported in other comprehensive income, net of tax.
The $12,000 accumulates in a separate equity account and will move into net income when the securities are sold, so investors can see value changes that have not yet been realized.
| Statement of comprehensive income, 2025 | Amount |
|---|---|
| Net income | $217,500 |
| Other comprehensive income: unrealized gain on available-for-sale debt securities, $16,000 less $4,000 tax | 12,000 |
| Comprehensive income | $229,500 |
Part C: Operating Cash Flows, Indirect Method
Depreciation and the disposal loss reduced income without using cash, so they are added back. The investment gain is subtracted because its cash belongs in investing activities. Working capital changes convert accrual revenues and expenses to cash: customers owed $28,000 more at year end, so cash collected trailed sales, while slower payment to suppliers kept $19,000 in the company. Operating cash flow exceeds net income by $71,100, a healthy sign. Sloan (1996) showed that profits resting mostly on accruals fade faster than profits matched by cash inflows, so Kittatinny's cushion of cash over income is a good sign worth tracking.
| Cash flows from operating activities | Amount |
|---|---|
| Net income | $217,500 |
| Depreciation expense | 60,000 |
| Gain on sale of investments | (10,000) |
| Loss on disposal of kayak division | 20,000 |
| Increase in accounts receivable | (28,000) |
| Decrease in inventory | 14,000 |
| Increase in prepaid insurance | (3,000) |
| Increase in accounts payable | 19,000 |
| Increase in wages payable | 1,500 |
| Decrease in deferred revenue | (2,400) |
| Net cash provided by operating activities | $288,600 |
Part D: Revenue Recognition for a Bundle
Kittatinny's new Base Camp package sells for $1,200 and includes a four-person tent, a two-year service plan and one guided overnight trip. Applying the five steps: the contract is the sale; there are three performance obligations because each item has value on its own; the transaction price is $1,200; the price is allocated by standalone selling prices; and revenue is recognized as each obligation is satisfied (Financial Accounting Standards Board [FASB], 2014).
For a package sold on December 1, 2025, December revenue is $857.14 for the tent plus one month of the service plan, $5.36, or $862.50. The remaining $337.50 is a contract liability at year end.
| Obligation | Standalone price | Allocation | When recognized |
|---|---|---|---|
| Tent | $1,000 | $857.14 | At delivery |
| Two-year service plan | 150 | 128.57 | Evenly over 24 months |
| Guided trip | 250 | 214.29 | When the trip occurs |
| Total | $1,400 | $1,200.00 | Over the contract |
References
Financial Accounting Standards Board. (2014). Revenue from contracts with customers (Topic 606) (Accounting Standards Update No. 2014-09).
Sloan, R. G. (1996). Do stock prices fully reflect information in accruals and cash flows about future earnings? The Accounting Review, 71(3), 289-315. https://doi.org/10.2308/tar-9608042309
Spiceland, J. D., Nelson, M. W., & Thomas, W. B. (2020). Intermediate accounting (10th ed.). McGraw-Hill Education.
ACC 2010 Module 3 instructions, in plain terms
Module 3 covers the income statement, comprehensive income, the statement of cash flows and revenue recognition, the broadest module in ACC-2010 and the last one on the midterm exam. The third set draws on several chapters at once, so expect a long assignment; the usual labeling, ordering and show-your-work rules still apply. Expect items on presenting discontinued operations and earnings per share, separating net income from other comprehensive income, preparing the operating section by the indirect method and applying the five-step revenue model, including allocation to multiple performance obligations. Some items may use the real annual report assigned in the course. Each item below was written new for this page in the chapter-end style.
How the ACC 2010 Module 3 example is put together
Each part follows a statement or schedule format that mirrors what the textbook uses. The first schedule is Kittatinny's 2025 income statement in multiple-step form, with the kayak division split out below continuing operations and the division's loss traced through its own tax benefit. Part B moves the unrealized securities gain into other comprehensive income and explains where it goes later. Part C lays out the indirect method line by line and explains the logic of each adjustment, ending with what the gap between cash flow and income suggests. Part D walks through the five steps for a bundled sale, allocates the price in a table and computes December revenue and the year-end contract liability.
Where the marks sit in the ACC 2010 Module 3 rubric
Written Assignment 3 belongs to the group of five assignments sharing 30 percent of the ACC-2010 grade. Mentors grade for accurate answers and full supporting work. Graders walk down the income statement checking each subtotal, confirm the division's loss carries its own tax benefit and its own per-share line, see whether the securities gain landed outside net income, test the sign of each working capital line and add up the three allocated pieces. Explaining why each adjustment is added or subtracted earns credit beyond the totals, and partial credit is easier to award when each step is visible. Rounding allocations so they sum exactly to the transaction price is a small detail that mentors notice.
ACC 2010 Module 3 help from the desk
Most lost points on this set come from signs pointing the wrong way. In the indirect method, an increase in a current asset is subtracted and an increase in a current liability is added; reversing the signs is the error mentors see most. Gains are subtracted and losses added back because their cash flows belong elsewhere. Discontinued operations are reported net of their own tax, not with continuing operations' tax. In revenue allocation, use standalone selling prices, not costs, and make the pieces add up to the contract price. Label every schedule. A writer can solve your assigned income statement and cash flow items in this format, free for your first request.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Thomas Edison State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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ACC 2010 Module 3 questions, answered
Where can I find a free ACC 2010 Module 3 sample paper?
You can read the whole third assignment above: an income statement with discontinued operations and EPS, comprehensive income, the indirect operating cash flow section and a five-step revenue allocation.
How are discontinued operations reported?
Below income from continuing operations, net of their own income tax effect, with separate earnings per share, so users can see the results of the business that remains.
Why is depreciation added back in the indirect method?
It reduced net income without using cash, so adding it back moves from accrual income toward cash from operations.
How do you allocate a bundle price to performance obligations?
Divide the transaction price in proportion to each obligation's standalone selling price, then recognize each piece when that obligation is satisfied.
What goes in other comprehensive income?
Value changes a company has not yet cashed in, such as paper gains on bonds held for sale, currency translation swings and some pension remeasurements, each shown after tax.