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During calendar 2016. Brooks Inc. entered into an agreement to sell its Operations Division to Gibbygate Ltd. to focus their efforts on the expansion of
During calendar 2016. Brooks Inc. entered into an agreement to sell its Operations Division to Gibbygate Ltd. to focus their efforts on the expansion of other operating divisions. For purposes of income statement reporting, the Operations Division qualifies as a separate component of the business. The Operations Division incurred a net loss of $250,000 from the beginning of the year to the date of sale, December 15, 2016. The combined assets of the Operations Division had a net book value of $7,340.000 and were sold for $9,000,000 on December 15, 2016. Assume Brooks Inc. has an income tax rate of 40%. During the same period ending December 31, 2016. Brooks Inc.' continuing operations delivered a pre-tax income of $7,500,000. QUESTION: Show calculations and round to the nearest dollar. 1. Calculate the amounts Brooks Inc. should report for the following items in the Discontinued Operations section of the December 31, 2016 income statement: a) Net loss on Operation of Operations Division b) Net Gain or Loss on Disposal of Operations Division. 2. Present a partial income statement, with proper notes disclosure, for Brooks Inc. for the same period with proper title, beginning with the Net income from continuing operations
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