Assume that Blue Spruce Inc decided to sell DemandTV Ltd a s

Assume that Blue Spruce Inc. decided to sell DemandTV Ltd., a subsidiary, on September 30, 2017. There is a formal plan to dispose of the business component, and the sale qualifies for discontinued operations treatment. Pertinent data on the operations of the TV subsidiary are as follows: loss from operations from beginning of year to September 30, $2.1 million (net of tax); loss from operations from September 30 to end of 2017, $800,000 (net of tax); estimated loss on sale of net assets to December 31, 2017 (net of tax), $160,000. The year end is December 31. Blue Spruce prepares financial statements in accordance with IFRS.

REQUIRED:

1. What is the net income/loss from discontinued operations reported in 2017?

2. Prepare the discontinued operations section of the income statement for the year ended 2017?

Solution

Requirement 1 Net income/loss from discontinued operations reported in 2017 loss from operations from beginning of year to September 30, (Net of Tax) 21,00,000 loss from operations from September 30 to end of 2017 (Net of Tax)     8,00,000 Loss from operation of discontinued subsidiary, net of tax 29,00,000 Requirement 2 Blue Spruce Inc. Income Statement For the month ended December 31,2017 Discontinued operations: Loss from operation of discontinued subsidiary, net of tax 29,00,000 Loss on impairment of net assets, net of tax     1,60,000 Loss from discontinued operations 30,60,000