If the sale will extend beyond one year, what amount of gain or loss should the company report in its 2014 profit or loss?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On July 2014, Thunder Company is committed to a plan to sell a disposal group that represents a significant portion of its regulated operations. The sale requires regulatory approval, which could extend the period required to complete the sale beyond one year. Actions necessary to obtain that approval cannot be initiated until after a buyer is known and a firm purchase commitment is obtained. However, a firm purchase commitment is highly probable within one year. The noncurrent assets of disposal group have a carrying value of P4,000,000 and liabilities of P1,000,000. The total fair market value as of December 31, 2014 of the disposal group is P4,800,000. If the sale is completed within one year, the estimated cost to sell is P200,000, but if the sale will extend beyond one year, the present value of the estimated cost to sell is P180,000. If the sale will extend beyond one year, what amount of gain or loss should the company report in its 2014 profit or loss? 

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