On October 5, 2023, Diamond in the Blue Spruce Recruiting Group Inc.'s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 79% of its income from its human resources management practice. The Blue Division gets contracts to perform human resources management on an outsourced basis. The board decided to dispose of the division because of unfavourable operating results.

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Chapter1: Financial Statements And Business Decisions
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Income from Continuing Operations before Income Tax
Loss from Impairment of Assets of Discontinued Operations, less Applicable Income Tax Recovery
Income from Continuing Operations before Income Tax
Applicable Income Tax
Income Tax Expense
Income from Operations of the Discontinued Blue Division, less Applicable Income Tax
Net Income /(Loss)
Show Transcribed Text
erations before Income Tax
Diamond in the Blue Spruce Recruiting Group Inc.
Partial Income Statement
For the Year Ended December 31, 2023
erations before Income Tax
sets of Discontinued Operations, less Applicable Income Tax Recovery
the Discontinued Blue Division, less Applicable Income Tax
ů
Diamond in the Blue Spruce Recruiting Group Inc.
Partial Income Statement
For the Year Ended December 31, 2023
Ć
$
37800
5250
V
$
$
37800
5250
146000
20000
126000
43050
93450
Transcribed Image Text:Income from Continuing Operations before Income Tax Loss from Impairment of Assets of Discontinued Operations, less Applicable Income Tax Recovery Income from Continuing Operations before Income Tax Applicable Income Tax Income Tax Expense Income from Operations of the Discontinued Blue Division, less Applicable Income Tax Net Income /(Loss) Show Transcribed Text erations before Income Tax Diamond in the Blue Spruce Recruiting Group Inc. Partial Income Statement For the Year Ended December 31, 2023 erations before Income Tax sets of Discontinued Operations, less Applicable Income Tax Recovery the Discontinued Blue Division, less Applicable Income Tax ů Diamond in the Blue Spruce Recruiting Group Inc. Partial Income Statement For the Year Ended December 31, 2023 Ć $ 37800 5250 V $ $ 37800 5250 146000 20000 126000 43050 93450
On October 5, 2023, Diamond in the Blue Spruce Recruiting Group Inc.'s board of directors decided to dispose of the Blue Division. A
formal plan was approved. Diamond derives approximately 79% of its income from its human resources management practice. The
Blue Division gets contracts to perform human resources management on an outsourced basis. The board decided to dispose of the
division because of unfavourable operating results.
Net income for Diamond was $93,450 for the fiscal year ended December 31, 2023 (after a charge for tax at 30% and after a
writedown for the Blue assets). Income from operations of the Blue Division accounted for $5,250 (after tax) of this amount.
Because of the unfavourable results and the extreme competition, the board believes that it cannot sell the business intact. Its final
decision is to auction off the office equipment. The equipment is the division's only asset and has a carrying value of $24,000 at
October 5, 2023. The board believes that proceeds from the sale will be approximately $4,000 after the auction expenses. Currently,
the equipment's estimated fair value is $6,400. The Blue Division qualifies for treatment as a discontinued operation. Diamond
prepares financial statements in accordance with ASPE.
(a)
Prepare a partial income statement for Diamond in the Blue Spruce Recruiting Group. The income statement should begin with
income from continuing operations before income tax.
Transcribed Image Text:On October 5, 2023, Diamond in the Blue Spruce Recruiting Group Inc.'s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 79% of its income from its human resources management practice. The Blue Division gets contracts to perform human resources management on an outsourced basis. The board decided to dispose of the division because of unfavourable operating results. Net income for Diamond was $93,450 for the fiscal year ended December 31, 2023 (after a charge for tax at 30% and after a writedown for the Blue assets). Income from operations of the Blue Division accounted for $5,250 (after tax) of this amount. Because of the unfavourable results and the extreme competition, the board believes that it cannot sell the business intact. Its final decision is to auction off the office equipment. The equipment is the division's only asset and has a carrying value of $24,000 at October 5, 2023. The board believes that proceeds from the sale will be approximately $4,000 after the auction expenses. Currently, the equipment's estimated fair value is $6,400. The Blue Division qualifies for treatment as a discontinued operation. Diamond prepares financial statements in accordance with ASPE. (a) Prepare a partial income statement for Diamond in the Blue Spruce Recruiting Group. The income statement should begin with income from continuing operations before income tax.
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