Results of Discontinued Operations On November 30, 2016, Fleiner Company announced its plans to discontinue the operations of Division P (a major component of the company) by selling the division. On December 31, 2016, Division P had not yet been sold and was classified as held for sale. On this date, Division P had assets with a book value of $920,000 and liabilities with a book value of $610,000. Fleiner estimates that the fair value of Division P on this date is $190,000. During 2016, Division P earned revenues of $920,000 and incurred expenses of $980,000. Fleiner is subject to a 30% income tax rate. Required: 1. Compute the following for Division P of Fleiner Company: a) Pretax income or loss from discontinued operations b) Income tax expense or credit for discontinued operations c) After tax income or loss from discontinued operations d) Pretax income or loss on write-down of Division P held-for-sale $ e) Income tax expense or credit for write-down of Division P held-for-sale $ f) After tax income or loss on write-down of Division P held-for-sale 2. Prepare the results from discontinued operations section of Fleiner's income statement for 2013. Results from discontinued operations: Loss✔✔ from operations of discontinued Division P net of income tax credit Loss ✔ Credit Loss ✔ Loss ✔ Credit✔ Total Loss Loss ✔ on write-down of held-for-sale Division P net of income tax credit ✔
Results of Discontinued Operations On November 30, 2016, Fleiner Company announced its plans to discontinue the operations of Division P (a major component of the company) by selling the division. On December 31, 2016, Division P had not yet been sold and was classified as held for sale. On this date, Division P had assets with a book value of $920,000 and liabilities with a book value of $610,000. Fleiner estimates that the fair value of Division P on this date is $190,000. During 2016, Division P earned revenues of $920,000 and incurred expenses of $980,000. Fleiner is subject to a 30% income tax rate. Required: 1. Compute the following for Division P of Fleiner Company: a) Pretax income or loss from discontinued operations b) Income tax expense or credit for discontinued operations c) After tax income or loss from discontinued operations d) Pretax income or loss on write-down of Division P held-for-sale $ e) Income tax expense or credit for write-down of Division P held-for-sale $ f) After tax income or loss on write-down of Division P held-for-sale 2. Prepare the results from discontinued operations section of Fleiner's income statement for 2013. Results from discontinued operations: Loss✔✔ from operations of discontinued Division P net of income tax credit Loss ✔ Credit Loss ✔ Loss ✔ Credit✔ Total Loss Loss ✔ on write-down of held-for-sale Division P net of income tax credit ✔
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Results of Discontinued Operations
On November 30, 2016, Fleiner Company announced its plans to discontinue the operations of Division P (a major
component of the company) by selling the division. On December 31, 2016, Division P had not yet been sold and
was classified as held for sale. On this date, Division P had assets with a book value of $920,000 and liabilities with
a book value of $610,000. Fleiner estimates that the fair value of Division P on this date is $190,000. During 2016,
Division P earned revenues of $920,000 and incurred expenses of $980,000. Fleiner is subject to a 30% income
tax rate.
Required:
1. Compute the following for Division P of Fleiner Company:
a) Pretax income or loss from discontinued operations
Loss ✔
Credit
b) Income tax expense or credit for discontinued operations
c) After tax income or loss from discontinued operations
Loss ✔
d) Pretax income or loss on write-down of Division P held-for-sale
$
Loss ✔
e) Income tax expense or credit for write-down of Division P held-for-sale $
Credit
f) After tax income or loss on write-down of Division P held-for-sale
Loss ✔
2. Prepare the results from discontinued operations section of Fleiner's income statement for 2013.
Results from discontinued operations:
Loss✔✔ from operations of discontinued Division P net of income tax credit
Loss ✔✔ on write-down of held-for-sale Division P net of income tax credit ✔
Total
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