Suppose that the Footwear Division's assets had not been sold by December 31, 2013, but were considered held for sale. Assume that the fair value of these assets at December 31 was $40 million. In the 2013 income statement for Foxtrot Co., it would report a loss from discontinued operations of:
A)$3 million loss.
B)$10 million loss.
C)$10.8 million loss.
D)$18 million loss.

Question

Quizplus · Accepted Answer

To calculate the loss from discontinued operations, we need to compare the carrying value of the assets with their fair value less cost to sell. Assuming the carrying value of Footwear Division's assets is $50 million and it is considered held for sale at the end of 2013, then the loss from discontinued operations would be $10.8 million ($50 million - $40 million less cost to sell). Therefore, the correct choice is C.

Suppose That the Footwear Division's Assets Had Not Been Sold