Assume that Blue Spruce Inc. decided to sell DemandTV Ltd., asubsidiary, on September 30, 2017. There is a formal plan todispose of the business component, and the sale qualifies fordiscontinued operations treatment. Pertinent data on the operationsof the TV subsidiary are as follows: loss from operations frombeginning of year to September 30, $2.1 million (net of tax); lossfrom operations from September 30 to end of 2017, $800,000 (net oftax); estimated loss on sale of net assets to December 31, 2017(net of tax), $160,000. The year end is December 31. Blue Spruceprepares financial statements in accordance with IFRS.
REQUIRED:
1. What is the net income/loss from discontinued operationsreported in 2017?
2. Prepare the discontinued operations section of the incomestatement for the year ended 2017?
Assume that Blue Spruce Inc. decided to sell DemandTV Ltd., asubsidiary, on September 30, 2017. There is a formal plan todispose of the business component, and the sale qualifies fordiscontinued operations treatment. Pertinent data on the operationsof the TV subsidiary are as follows: loss from operations frombeginning of year to September 30, $2.1 million (net of tax); lossfrom operations from September 30 to end of 2017, $800,000 (net oftax); estimated loss on sale of net assets to December 31, 2017(net of tax), $160,000. The year end is December 31. Blue Spruceprepares financial statements in accordance with IFRS.
REQUIRED:
1. What is the net income/loss from discontinued operationsreported in 2017?
2. Prepare the discontinued operations section of the incomestatement for the year ended 2017?
Related questions
| The following information has been reported by Laporte Inc. on its statements of financial position at December 31, 2016 and 2017, and on its statement of earnings for the year ended December 31, 2017. Amounts are in millions of dollars: |
| Statements of Financial Position | ||||||||||
| 2017 | 2016 | |||||||||
| Cash | $ | 114 | $ | 80 | ||||||
| Accounts receivable | 46 | 36 | ||||||||
| Merchandise inventory | 40 | 44 | ||||||||
| Long-term investments | - | 30 | ||||||||
| Property, plant, and equipment | 232 | 190 | ||||||||
| Accumulated depreciation | (90 | ) | (108 | ) | ||||||
| Total assets | $ | 342 | $ | 272 | ||||||
| Accounts payable | $ | 36 | 62 | |||||||
| Income taxes payable | 15 | 16 | ||||||||
| Long-term borrowings | 92 | 32 | ||||||||
| Contributed capital | 139 | 112 | ||||||||
| Retained earnings | 60 | 50 | ||||||||
| Total liabilities and shareholdersâ equity | $ | 342 | $ | 272 | ||||||
| Statement of Earnings | ||||||||||
| Sales | $ | 176 | ||||||||
| Cost of sales | (96 | ) | ||||||||
| Gross profit | 80 | |||||||||
| Depreciation expense | (22 | ) | ||||||||
| Other operating expenses | (40.0 | ) | ||||||||
| Earnings from operations | 18.0 | |||||||||
| Gain on sale of investments | 18 | |||||||||
| Loss on sale of equipment | (14 | ) | ||||||||
| Earnings before income tax | 22.0 | |||||||||
| Income tax expense | 8.8 | |||||||||
| Net earnings | $ | 13.2 | ||||||||
| ||||||||||
Kandon Enterprises, Inc., has two operating divisions; onemanufactures machinery and the other breeds and sells horses. Bothdivisions are considered separate components as defined bygenerally accepted accounting principles. The horse division hasbeen unprofitable, and on November 15, 2016, Kandon adopted aformal plan to sell the division. The sale was completed on April30, 2017. At December 31, 2016, the component was considered heldfor sale. |
On December 31, 2016, thecompanyâs fiscal year-end, the book value of the assets of thehorse division was $415,000. On that date, the fair value of theassets, less costs to sell, was $350,000. The before-tax loss fromoperations of the division for the year was $290,000. The companyâseffective tax rate is 40%. The after-tax income from continuingoperations for 2016 was $550,000. |
| Required: | |
| 1. | Prepare a partial income statement for 2016 beginning withincome from continuing operations. Ignore EPS disclosures.(Amounts to be deducted should be indicated with a minussign.) 2. Prepare a partial income statement for 2016beginning with income from continuing operations. Assuming that theestimated net fair value of the horse divisionâs assets was$700,000, instead of $350,000. Ignore EPS disclosures.(Amounts to be deducted should be indicated with a minussign.) |
