Play Cloth Company, a retailer of children’s clothing, decided to dispose of its European division. The company announced the plan to sell the division on 20 March 20X1.  Once the announcement was made, management hired a professional services firm to assist with finding a buyer for the division. The firm would charge 4.5% commission on the sale of the division. 

. The European division had a carrying value of $51,100,000 and was listed for sale at a price of $49,000,000. The sale price was determined in reference to an independent fair value appraisal. 

. The division earned $5,500,000 from 1 July 20X0-19 March 20X1 and $1,000,000  between 20 March 20X1-30 June 20X1.

. On 30 June 20X1 an appraisal indicated that the fair value of the division was approximately $49,500,000.

. Play Cloth had total earnings from continuing operations (after tax) of $130,000,000 for the year ended 30 June 20X1.

. Play Cloth has a tax rate of 25%.

Required:

1. Determine whether the European division qualifies as a discontinued operation.

2. Calculate the total gain (loss) on sale for the European division.

3. Prepare a partial SCI for the year ended 30 June 20X1 using the information provided.