60.1K

Verified Solution

Link Copied!

Results of Discontinued Operations

During December 2016, Smythe Company decides to sell Division F (a component of the company). On December 31, 2016, the company classifies Division F as held for sale. On that date, the book values of Division F's assets and liabilities are $940,000 and $600,000, respectively. Smythe expects to sell Division F in 2017 and estimates that the fair value of Division F is $240,000. During 2016, Division F earned revenues of $1,000,000 and incurred expenses of $1,500,000. Smythe is subject to a 30% income tax rate.

Required:

1. Compute the following for Division F of Smythe Company:

a) Pretax income or loss from discontinued operations	$	Loss < >IncomeLoss
b) Income tax expense or credit for discontinued operations	$	Credit < >CreditExpense
c) After tax income or loss from discontinued operations	$	Loss < >IncomeLoss
d) Pretax income or loss on write-down of Division F held-for-sale	$	Loss < >IncomeLoss
e) Income tax expense or credit for write-down of Division F held-for-sale	$	Credit < >CreditExpense
f) After tax income or loss on write-down of Division F held-for-sale	$	Loss < >IncomeLoss

2. Prepare the results from discontinued operations section of Smythe income statement for 2016.

Results from discontinued operations:
Loss < >IncomeLoss from operations of discontinued Division F net of income tax credit < >net of income tax creditnet of income tax expense	$
Loss < >GainLoss on write-down of held-for-sale Division F net of income tax expense < >net of income tax creditnet of income tax expense	$
Total

Answer & Explanation Solved by verified expert

See Answer