Question

On September 17, 2021, Ziltech, Inc., entered into an agreement to sell one of its divisions that qualifies as a component of the entity according to generally accepted accounting principles. By December 31, 2021, the company's fiscal year-end, the division had not yet been sold, but was considered held for sale. The net fair value (fair value minus costs to sell) of the division's assets at the end of the year was $10 million. The pretax income from operations of the division during 2021 was $2 million. Pretax income from continuing operations for the year totaled $13 million. The income tax rate is 25%. Ziltech reported net income for the year of $51 million Required: Determine the book value of the division's assets on December 31, 2021. (Enter your answer in whole dollars not in millions.) Book value of division's assets

Answer 1

solution & Determination of the book value of divison's assets 3250000 Step 1 psetax Income from Coontinuing operations $ 13000000 Less! Income tax expense (25%) Income from continuing gperations 9750ooo less - Net Income Loss from discontinued operations $4650000 Slooooo 1- tax rate of 25% 75% pretar loss from discontinued operations $ 6200000 4 65oooo 75% Step 2: pretax Income of divison Add Loss from discontinued operation Impairment less 2000000 6200000 8200000

2 Step 3 8 fair value of divisoris assets Add Impairment loss 10 000 000 8 200.000 Book ralue of desisosis Assets 18200000