Question

On December 31, 20x9, Pathos Food Service’s management decided to sell the Baclava division which has book value of $810,000. Management believes the division can be sold for $705,000 after spending $101,000 in sales costs. Baclava reported a monthly income of $29,000 in 20X9 and a monthly loss of $11,000 in 2x10. The division meets the rules to be classified as an asset held for sale as well as qualifying as a discontinued operation. The division sold for $692,000 on March 31, 2x10. Ignore income taxes. What does the company report as discontinued operations in 2x10?

Answer 1

Answer:

$11000

Explanation:

In general terms, assets held for sale are not depreciated, are measured at the lower of carrying amount and fair value fewer costs to selling, and are presented separately in the statement of financial position The company will report $11000 in 2x10 despite meeting criteria to be classified as held for sale, a loss is still elgibe to count down in the period in which it occurs. In this case, only one-month loss is counted.