What is the answer Required information IThe following infor

What is the answer?

Required information IThe following information applies to the questions displayed below n September 1, 2016, Jacob Furniture Mart enters into a tentative agreement to sell the ets of its office equipment division. This division qualifies as a component of the entity according to GAAP regarding discontinued operations. The division\'s contribution o Jacob\'s operating income for 2016 was a $2.10 million loss before taxes. Jacob has an average tax rate of 30% Scenario 3: Assume that Jacob had not yet sold the office furniture division by the end of 2016. Further, assume that the fair value less costs to sell of the division\'s assets at December 31, 2016, was $11.10 million and was expected to remain the same when the assets are sold in 2017. The book value of the division\'s assets was $18.19 million at the end of the year Required Under these assumptions, what would Jacob report in its 2016 income statement regarding the office equipment division? (Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50.) oss from discontinued operations million

Solution

Jacob would report = $2.10 milion operating loss + $7.09 million impairment loss = $9.19 million

= $9.19 million net of 30 % tax benefit i.e. $2.757 million = $6.433 loss from discontinued operations. The loss represents the total of the predisposal loss from operating the division ($2.10 million) and the impairment of the division\'s assets ($7.09 million) that will be sold in 2017. This $6.433 million net-of-tax loss ($9.19 million x [1 - .30]) would be reported in income statement of 2016 regarding ofiice furniture division.