2. On November 30, 2017, MoBull Co. decided to dispose of asegment B. The...

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Accounting

2. On November 30, 2017, MoBull Co. decided to dispose of asegment B. The sale was not complete at
the end of 2017. During 2017, segment B generated operatingincome of $300,000. The historical
cost of segment B is $1,000,000 and the Accumulated Depreciationon segment B at 12/31/17 is
$400,000. At December 31, 2017, the fair value of segment B wasestimated at $630,000 and the
cost to sell segment B was estimated to be $10,000. MoBull Co.sold segment B on May 17, 2018 for
$615,000. During 2018, segment B generated operating loss of$40,000. MoBull has a 30% tax rate
in all years.
a) Provide the journal entry to record any impairment of SegmentB in 2017. If no journal entry,
justify why.
b) Provide the Discontinued Operations Section of the 2017Multistep Income Statement.
MoBull’s common shares outstanding at the end of 2017 and 2018were 525,000 and 475,000,
respectively. In 2018, MoBull declared a preferred stockdividend of $100,000, but only paid
$70,000 of the dividend in 2018. In 2018, MoBull declared acommon stock dividend of $200,000
and paid $240,000.
c) Provide the 2018 Partial Income Statement, starting withIncome from Continuing Operations of
$1,000,000. Include the first four lines and EPS information.Good format is required.
d) Provide the journal entry to record the disposal of SegmentB. GJEF is required.

Answer & Explanation Solved by verified expert

4.5 Ratings (834 Votes)

1a Net book value of Segment B1000000Historical cost400000Accumulated Depreciation 600000 Estimated net salleing price 63000010000 cost to sell620000 As the net selling price is higher than the book value by 20000620000600000 there is no need of See Answer

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In: Accounting2. On November 30, 2017, MoBull Co. decided to dispose of asegment B. The sale...2. On November 30, 2017, MoBull Co. decided to dispose of asegment B. The sale was not complete atthe end of 2017. During 2017, segment B generated operatingincome of $300,000. The historicalcost of segment B is $1,000,000 and the Accumulated Depreciationon segment B at 12/31/17 is$400,000. At December 31, 2017, the fair value of segment B wasestimated at $630,000 and thecost to sell segment B was estimated to be $10,000. MoBull Co.sold segment B on May 17, 2018 for$615,000. During 2018, segment B generated operating loss of$40,000. MoBull has a 30% tax ratein all years.a) Provide the journal entry to record any impairment of SegmentB in 2017. If no journal entry,justify why.b) Provide the Discontinued Operations Section of the 2017Multistep Income Statement.MoBull’s common shares outstanding at the end of 2017 and 2018were 525,000 and 475,000,respectively. In 2018, MoBull declared a preferred stockdividend of $100,000, but only paid$70,000 of the dividend in 2018. In 2018, MoBull declared acommon stock dividend of $200,000and paid $240,000.c) Provide the 2018 Partial Income Statement, starting withIncome from Continuing Operations of$1,000,000. Include the first four lines and EPS information.Good format is required.d) Provide the journal entry to record the disposal of SegmentB. GJEF is required.