Presented below are the condensed income statement of Ku Co. for the years ended December 31, 2020 and 2019: 2020 2019 Sales $500,000 $490,000 Cost of Goods Sold $335,000 $330,000 Gross Income $165,000 $160,000 Operating Expenses $67,500 $65,000 Operating Income $97,500 $95,000 Gain on sale of division $20,000 0 Net income before income tax $117,500 $95,000 Income tax expense (35%) $41,125 $33,250 Net Income $76,375 $61,750 On October 10, 2020, Renegade entered into an agreement to sell the assets of one of its geographical segments. The geographical segment comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company. The segment was sold on December 31, 2020, for $175,000. The book value of the segment's assets was $155,000. The segment's contribution to Renegades' operating income before tax for each year was as follows: 2020 11,375 loss 2019 8,125 income Assume that by December 31, 2020, the segment had not yet been sold but was considered held for sale. The fair value of the segment's assets on December 31 was $125,000. What is the post-tax loss from discontinued operations for 2020, based on the above data?
Presented below are the condensed income statement of Ku Co. for the years ended December 31, 2020 and 2019: 2020 2019 Sales $500,000 $490,000 Cost of Goods Sold $335,000 $330,000 Gross Income $165,000 $160,000 Operating Expenses $67,500 $65,000 Operating Income $97,500 $95,000 Gain on sale of division $20,000 0 Net income before income tax $117,500 $95,000 Income tax expense (35%) $41,125 $33,250 Net Income $76,375 $61,750 On October 10, 2020, Renegade entered into an agreement to sell the assets of one of its geographical segments. The geographical segment comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company. The segment was sold on December 31, 2020, for $175,000. The book value of the segment's assets was $155,000. The segment's contribution to Renegades' operating income before tax for each year was as follows: 2020 11,375 loss 2019 8,125 income Assume that by December 31, 2020, the segment had not yet been sold but was considered held for sale. The fair value of the segment's assets on December 31 was $125,000. What is the post-tax loss from discontinued operations for 2020, based on the above data?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Presented below are the condensed income statement of Ku Co. for the years ended December 31, 2020 and 2019:
| 2020 | 2019 | |
| Sales | $500,000 | $490,000 |
| Cost of Goods Sold | $335,000 | $330,000 |
| Gross Income | $165,000 | $160,000 |
| Operating Expenses | $67,500 | $65,000 |
| Operating Income | $97,500 | $95,000 |
| Gain on sale of division | $20,000 | 0 |
| Net income before income tax | $117,500 | $95,000 |
| Income tax expense (35%) | $41,125 | $33,250 |
| Net Income | $76,375 | $61,750 |
On October 10, 2020, Renegade entered into an agreement to sell the assets of one of its geographical segments. The geographical segment comprises operations and
2020 11,375 loss
2019 8,125 income
Assume that by December 31, 2020, the segment had not yet been sold but was considered held for sale. The fair value of the segment's assets on December 31 was $125,000. What is the post-tax loss from discontinued operations for 2020, based on the above data?
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