NSC Ltd. has a 31 May fiscal year- end. NSC disposed of its Information Systems Group (ISG) on 31 January 20X3. ISG had a net loss (after taxes) of $ 37,700,000 in 20X3, to the date of disposal. The division was sold for $ 475,600,000 in cash plus future royalties through 31 May 20X4, which were guaranteed to be $ 30,000,000. The minimum guaranteed royalties were included in the computation of the 20X3 gain on the sale of the division. Actual royalties received in 20X4 were $ 35,500,000. Excerpts from comparative income statements found in the 31 May 20X4 financial statements are as follows:
Required: 1. Determine the net book value of ISG at the date of disposal. 2. Why does NSC report a gain on the sale of the discontinued operation of $ 4.3 million in the year ending 31 May 20X4? 3. NSC reports an after- tax loss from discontinued operations of $ 37.7 million for the year ending 31 May 20X3. Over what period was the lossaccrued?