Black Media Inc. owns and operates a large number of newspapers across Canada. On 1 October 20X5, the board of directors voted unanimously to dispose of one of those newspapers, The Daily Con. Black Media would continue to publish The Daily Con while a buyer was being sought. As Black Media was facing some financial problems, the board hoped for a quick sale. The newspaper was Black Media’s sole holding in that city, and thus the newspaper’s assets and liabilities could easily be transferred to a new owner. The board authorized an immediate search for possible buyers, and the company received several indications of interest by the end of 20X5. The net assets of The Daily Con can be summarized as follows:

REQUIRED:

1. Does the potential sale of The Daily Con qualify for treatment as a disposal group? Explain.

2. Give the appropriate entry or entries pertaining to The Daily Con on 1 October 20X5.

3. Assume that there is no change in recoverable amounts between 1 October and 31 December 20X5. Show how the year end 20X5 SFP and SCI will be affected by the decision to sell The Daily Con.

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Carrylng Values, 30 September 20X5 Estimated Accumulated Recoverable Cost Depreciation Book Value Value $ 10,000 $ 10,000 Cash Accounts receivable 45,000 40,000 Inventory 55,000 45,000 Motor vehicles 700,000 400,000 300,000 150,000 Land 375,000 375,000 425,000 Building 1,250,000 1,000,000 250,000 300,000 Equipment and furnishings 225,000 175,000 50,000 40,000 Accounts payable (60,000) (60,000) (60.000) $1.025.000 $1.005.000