On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc.

Question:

On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2016. The following additional facts pertain to the transaction:
• The Footwear Division qualifies as a component of the entity according to regarding discontinued operations.
• The book value of Footwear's assets totaled $48 million on the date of the sale.
• Footwear's operating income was a pre-tax loss of $10 million in 2016.
• Foxtrot's income tax rate is 40%. In the 2016 income statement for Foxtrot Co., it would report income from discontinued operations of:
A. $9.2 million.
B. $13.2 million.
C. $22 million.
D. $26 million
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...