Question

The following comparative income statement (in thousands of dollars) for the two recent fiscal years was adapted from the annual report of Motor Speedways Inc., owner and operator of several major motor speedways. Current Year Previous Year Revenues: Admissions $94,800.00 $107,140.00 Event-related revenue 132,720.00 132,951.00 5 NASCAR broadcasting revenue 173,958.00 164,119.00 Other operating revenue 72,522.00 82,790.00 Total revenue $474,000.00 $487,000.00

Answer 1

A.

	Motor Speedways Inc.
	Comparative Income Statement (in thousands of dollars)
	For the Years Ended December 31
1		Current Year	Current Year	Previous Year	Previous Year
2		Amount	Percent	Amount	Percent
3	Revenues:
4	Admissions	94800.00	20.0%	107140.00	22.0%
5	Event-related revenue	132720.00	28.0%	132951.00	27.3%
6	NASCAR broadcasting revenue	173958.00	36.7%	164119.00	33.7%
7	Other operating revenue	72522.00	15.3%	82790.00	17.0%
8	Total revenue	474000.00	100.0%	487000.00	100.0%
9	Expenses and other:
10	Direct expense of events	96696.00	20.4%	93017.00	19.1%
11	NASCAR purse and sanction fees	117552.00	24.8%	119802.00	24.6%
12	Other direct expenses	18960.00	4.0%	28733.00	5.9%
13	General and administrative	193392.00	40.8%	216228.00	44.4%
14	Total expenses and other	426600.00	90.0%	457780.00	94.0%
15	Income from continuing operations	47400.00	10.0%	29220.00	6.0%

Kindly round off as required since the rounding off instructions have not been provided along with the question.

B. The significant changes during the current year as compared to the previous year are:

Though the revenue during the current year was lower than the previous year, there has been an increase in the income from continuing operations from 6% to 10% mainly due to the reduction in the other direct expenses and the general and administrative expenses which has resulted in a decrease in the total expenses from 94% to 90% of sales and hence an increase in the income from continuing operations.