On October 1 of the current year, Blain Company approved a formal plan to sell the McKay Division, considered a component of the business. The sale will occur on March 31 of the following year. The division had operating income of $400,000 (pretax) for the year ended December 31, but expects to incur an operating loss of $80,000 for the first quarter of next year. Blain determines the carrying value and fair value (net of selling costs) of the McKay Division to be $4,000,000 and $3,840,000, respectively, on December 31. Blain’s tax rate for the year is 25%. Weighted average number of common shares outstanding in the current year is 250,000.

Required

a. Assume Blain Company’s income from continuing operations is $1,840,000 (after tax) in the current year. Prepare a partial income statement beginning with income from continuing operations. Include earnings per share disclosures.

• Use a negative sign to indicate a loss.
• Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny.
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Income from continuing operations Discontinued operations Impairment loss on discontinued component, net of tax savings # $ Per share: Impairment loss on discontinued, component, net of tax savings # $ + $ b. How does the answer to part a change if the fair value of the McKay Division's net assets were $4,160,000 instead of $3,840,000 on December 31? • Use a negative sign to indicate a loss. • Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny. Discontinued operations Impairment loss on discontinued component, net of tax savings # $ Per share: Impairment loss on discontinued, component, net of tax savings # $ Income from continuing operations Discontinued operations Impairment loss on discontinued component, net of tax savings # $ Per share: Impairment loss on discontinued, component, net of tax savings # $ + $ b. How does the answer to part a change if the fair value of the McKay Division's net assets were $4,160,000 instead of $3,840,000 on December 31? • Use a negative sign to indicate a loss. • Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny. Discontinued operations Impairment loss on discontinued component, net of tax savings # $ Per share: Impairment loss on discontinued, component, net of tax savings # $

Answer rating: 100% (QA)

a Heres the partial income statement beginning with income from continuing operations including earn... View the full answer