On October 28, 2018, Mercedes Company committed to a plan to sell a division that qualified...
On October 28, 2018, Mercedes Company committed to a plan to
sell a division that qualified as a component of the entity
according to GAAP regarding discontinued operations and was
properly classified as held for sale on December 31, 2018, the end
of the company's fiscal year. The division's loss from operations
for 2018 was $1,980,000.
The division's book value and fair value less cost to sell on
December 31 were $2,830,000 and $3,690,000, respectively. What
before-tax amount(s) should Mercedes report as loss on discontinued
operations in its 2018 income statement?
Multiple Choice
-
$1,980,000 loss.
-
$2,840,000 loss.
-
No loss would be reported.
-
$860,000 gain included in continuing operations and a $1,980,000 loss from discontinued operations.
Homework Answers
| Division's loss from operations for 2018 | 1980000 | |
| Loss on Impairment | 0 | |
| Loss on discontinued operations in 2018 | 1980000 | loss |
| Option A $1,980,000 loss is correct | ||
| There is no impairment loss as fair value of assets exceeds book value | ||
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