Question 2. Turnbull Ltd. decided on January 1, 2017 to discontinue its plastic-

Question

Question 2. Turnbull Ltd. decided on January 1, 2017 to discontinue its plastic-making division. The division, properly identified as a reportable segment, was sold on June 1, 2017. Division assets with a carrying value of $1,600,000 were sold for $1,000,000. Operating income from January 1, to May 30, 2017 for the division amounted to $250,000. Income taxes are at the rate of 30%. Required: What amount should be reported on Turnbull's income statement for the year ended December 31, 2017 under the caption "discontinued operations"? Show all of your work to maximize marks.

Explanation / Answer

Particulars Amount ($) Carrying Value of the Asset 1600000 Less : Selling Price 1000000 Loss on Disposal Of Asset 600000 Less : Operating income from 01.01.2017-30.05.2017 from Division 250000 Loss from discontinued operations 350000

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