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Wand, Inc., has adopted FASB ASC 205-20 (Presentation of Financial Statements—Discontinued Operations). On October 1, 20X1, in a strategic shift, Wand, Inc., committed itself to a formal plan to sell its Kam division’s assets. On that date, Wand estimated that the loss from the disposal of assets in February 20X2 would be $25,000. Wand also estimated that Kam would incur operating losses of $100,000 for the period of October 1, 20X1, through December 31, 20X1, and $50,000 for the period January 1, 20X2, through February 28, 20X2. These estimates were materially correct. Assuming that the Kam division qualifies as a component, disregarding income taxes, what should Wand report as loss from discontinued operations in its comparative 20X1 and 20X2 income statements?
A.
20X1: $175,000; 20X2: $0Correct B.
20X1: $125,000; 20X2: $50,000C.
20X1: $100,000; 20X2: $75,000D.
20X1: $0; 20X2: $175,000This question below seems like it contradicts the answer. I am confused on what year you include the estimated loss.
Host Co. has adopted FASB ASC 205-20 (Presentation of Financial Statements—Discontinued Operations). On October 1, 20X1, in a strategic shift, Host Co. approved a plan to dispose of a segment of its business. Host expected that the sale would occur on April 1, 20X2, at an estimated gain of $350,000. The segment had actual and estimated operating losses as follows:
01/01/X1 to 09/30/X1 $(300,000)
10/01/X1 to 12/31/X1 (200,000)
01/01/X2 to 03/31/X2 (400,000)Assuming that the segment qualified as a component under FASB ASC 205-20-45, in its 20X1 income statement, what should Host report as a loss from operation of a discontinued segment?
A.
$200,000B.
$250,000Correct C.
$500,000D.
$600,000
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