On October 1, 2020, Croatan Corporation finalized its plans to discontinue operations of its retail component. The plan calls for the sale of the retail operations to another company for $700,000 (current fair value) on April 1, 2021. The current book value of the assets is $800,000. For the first nine months of 2020, the component incurred a pretax operating income of $60,000. During the last quarter of 2020 the pretax income was $10,000, while the expected pretax income for the first quarter in 2021 is expected to be $20,000. Croatan is subject to a 30% income tax rate. Required: Prepare the results from discontinued operations section of Croatan's income statement for 2020, using good format. Show all computations.
On October 1, 2020, Croatan Corporation finalized its plans to discontinue operations of its retail component. The plan calls for the sale of the retail operations to another company for $700,000 (current fair value) on April 1, 2021. The current book value of the assets is $800,000. For the first nine months of 2020, the component incurred a pretax operating income of $60,000. During the last quarter of 2020 the pretax income was $10,000, while the expected pretax income for the first quarter in 2021 is expected to be $20,000. Croatan is subject to a 30% income tax rate. Required: Prepare the results from discontinued operations section of Croatan's income statement for 2020, using good format. Show all computations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On October 1, 2020, Croatan Corporation finalized its plans to discontinue operations of its retail component. The plan calls for the sale of the retail operations to another company for $700,000 (current fair value) on April 1, 2021. The
current book value of the assets is $800,000. For the first nine months of 2020, the component incurred a pretax operating income of $60,000. During the last quarter of 2020 the pretax income was $10,000, while the expected pretax
income for the first quarter in 2021 is expected to be $20,000. Croatan is subject to a 30% income tax rate.
Required:
Prepare the results from discontinued operations section of Croatan's income
statement for 2020, using good format. Show all computations.
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