Remainder of Williams Division Company Sales revenues Cost of goods sold Operating expenses $950,000 $170,000 119,000 42,000 560,000 190,000 Woods is subject to a 30% income tax rate. On December 31, 2019, the net book value of Williams Division is $500,000, consisting of assets of $910,000 and liabilities of $410,000. On this date, Woods estimates that the fair value of Williams Division is $420,000. The company had 50,000 shares of common stock outstanding during all of 2019.
On November 1, 2019, Woods Company announced its plans to sell its subsidiary, Williams Division ( a major strategic component of the company). By December 31, 2019, Woods had not sold Williams Division and so it classifies the division as held for sale. During 2019, Woods recorded the following revenues and expenses for Williams Division and the remainder of the company:
1. Prepare the jounal entry on December 31, 2019, to record the pretax loss on held-for-sale Williams Division. Show supporting calculations. 2. Prepare a 2019 multiple-step income statement for Woods. 3. Show how wlliams Division would be reported on Woods’s December 31, 2019, balance sheet.
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