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29 May, 16:35

Bramble, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division's assets with a book value of $1272000 are sold for $898000. Operating income from January 1 to June 30 for the division amounted to $200000. Ignoring income taxes, what total amount should be reported on Bramble's income statement for the current year under the caption, Discontinued Operations?

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  1. 29 May, 18:18
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    The amount should be reported on Bramble's income statement for the current year under the caption, Discontinued Operations is a loss of $-174,000

    Explanation:

    According to the given data we have the following:

    Income from Discontinued operation=$200,000

    Loss on sale of Assets of discontinued operation=division's assets book value-price sold

    Loss on sale of Assets of discontinued operation=$1,272,000-$898,000

    Loss on sale of Assets of discontinued operation=$374,000

    Therefore, The amount should be reported on Bramble's income statement for the current year under the caption, Discontinued Operations can be calculated as follows:

    amount should be reported on Bramble's income statement=Income from Discontinued operation+Loss on sale of Assets of discontinued operation

    amount should be reported on Bramble's income statement=$200,000-$374,000

    amount should be reported on Bramble's income statement=$-174,000

    The amount should be reported on Bramble's income statement for the current year under the caption, Discontinued Operations is a loss of $-174,000
  2. 29 May, 19:20
    0
    Discontinued operations = $374,000 loss

    Explanation:

    Discontinued operations is defined as the part of a companie's operations that has been shut down or divested from normal or continued operations.

    Discontinued operations are reported seperately from the companie's normal operations.

    To calculate discontinued operation we find difference between the sale price of the division and the fair value, and minus transaction cost too.

    In this scenario

    Discontinued operations = Sale price - Book value

    Discontinued operations = 898,000 - 1,272,000

    Discontinued operations = $374,000 loss
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Home » Business » Bramble, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division's assets with a book value of $1272000 are sold for $898000.
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