On March 1, Year 7, Pill Company approved a formal plan to sell a segment that is
Question:
On March 1, Year 7, Pill Company approved a formal plan to sell a segment that is a component of the entity. This component of the entity meets the criteria for classification as held for sale, and the disposal is a strategic shift. The sale will occur on January 31, Year 8. The component had a
$200,000 operating loss from January 1 to March 1, Year 7, and an $800,000 operating loss from March 1 through December 31, Year 7. These losses excluded the effects of writing down the component to its fair value minus cost to sell. Pill expects to incur an operating loss on the component of $50,000 in January Year 8 and to realize a $150,000 gain on sale of its assets. Pill's tax rate is 40%. Assuming that Pill recognized a $500,000 loss in Year 7 from writing down the component to its fair value minus cost to sell.
How much loss from discontinued operations should Pill report in its December 31, Year 7, income statement?
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,