Question

On November 15, 20x1 Lima Co. sold a segment of its business for $2,750,000. The net book value of the segment at the time of its disposal was $2,900,000. Lima had pretax income from operations of $1,750,000 for 20x1 which included $360,000 recognized by the discontinued segment prior to its disposal. Assume Lima’ tax rate is 21%.

Required: Prepare a partial income statement for Lima Co. for 20x1, beginning with pretax income from continuing operations.

Answer 1

Cimo Co.. * Computatim he-tox Contincu Operations en comme le dos Particulars Anmount (9) Pre- tax Income $1,750,000 des: diy continued operations Income After ton $360,000 Sale of segment $ 150,000 ($ 510,000) ($ 9,750,000 - $2,900,000) Pre- tox income from Continous operations $ 1,240,000 – dis Continued operatiory and Sale Of Sigment this Que trealid other an comel loss. The difference in pe-tan (net in comu) and pre-tox of the income is tucaled oy pre-tou income for the Continous operations, both ove pre. toxed income The beginning of pre- tox en come from Continues operations = $ 1,940,000 Please do like-, Happy HomeworkLibing,