On October 5, 2023, Diamond in the Flint Recruiting Group Inc.'s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 75% 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 divisio because of unfavourable operating results. Net income for Diamond was $89,600 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 $4,200 (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 $5,000 after the auction expenses. Currently, the equipment's estimated fair value is $8,000. The Blue Division qualifies for treatment as a discontinued operation. Diamond prepares financial statements in accordance with ASPE.
On October 5, 2023, Diamond in the Flint Recruiting Group Inc.'s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 75% 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 divisio because of unfavourable operating results. Net income for Diamond was $89,600 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 $4,200 (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 $5,000 after the auction expenses. Currently, the equipment's estimated fair value is $8,000. The Blue Division qualifies for treatment as a discontinued operation. Diamond prepares financial statements in accordance with ASPE.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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pls and thanks
Transcribed Image Text:Operations before Income Tax
Diamond in the Flint Recruiting Group Inc.
Partial Income Statement
For the Year Ended December 31, 2023
of the Discontinued Blue Division, less Applicable Income Tax
>
>
$
LA
141000
89600
Transcribed Image Text:On October 5, 2023, Diamond in the Flint Recruiting Group Inc.'s board of directors decided to dispose of the Blue Division. A formal
plan was approved. Diamond derives approximately 75% 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 $89,600 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 $4,200 (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 $5,000 after the auction expenses. Currently,
the equipment's estimated fair value is $8,000. 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 Flint Recruiting Group. The income statement should begin with income from
continuing operations before income tax.
Income from Continuing Operations before Income Tax
Discontinued Operations
Diamond in the Flint Recruiting Group Inc.
Partial Income Statement
For the Year Ended December 31, 2023
Income from Operations of the Discontinued Blue Division, less Applicable Income Tax
Net Income /(Loss)
>
>
<
tA
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