On September 1, 20X1, Revsine Co. approved a plan to dispose of a segment of its business.
Question:
On September 1, 20X1, Revsine Co. approved a plan to dispose of a segment of its business. Revsine expected that the sale would occur on March 31, 20X2, at an estimated pre tax gain of $375,000. The segment had actual and estimated pre-tax operating profits (losses) as follows:
Realized loss from 1/1/20X1 to 8/31/20X1 ....................... $(300,000)
Realized loss from 9/1/20X1 to 12/31/20X1 ....................... (200,000)
Expected profit from 1/1/20X2 to 3/31/20X2 ....................... 400,000
The expected profit from 1/1/20X2 to 3/31/20X2 was based on Revsine’s expectations as of 12/31/20X1. Assume the marginal tax rate is 21%.
Required:
In its 20X1 income statement, what should Revsine report as profit or loss from discontinued operations (net of tax effects)?
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer