Exercise 4-04 a

On October 5, 2020, Diamond in the Marigold Recruiting Group Inc.s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 71% of its income from its human resources management practice. The Blue Division gets contracts to perform human resources management on an outsourced basis. The board decided to dispose of the division because of unfavourable operating results. Net income for Diamond was $94,710 for the fiscal year ended December 31, 2020 (after a charge for tax at 30% and after a writedown for the Blue assets). Income from operations of the Blue Division accounted for $4,410 (after tax) of this amount. Because of the unfavourable results and the extreme competition, the board believes that it cannot sell the business intact. Its final decision is to auction off the office equipment. The equipment is the divisions only asset and has a carrying value of $23,000 at October 5, 2020. The board believes that proceeds from the sale will be approximately $6,000 after the auction expenses. Currently, the equipments estimated fair value is $9,600. The Blue Division qualifies for treatment as a discontinued operation. Diamond prepares financial statements in accordance with ASPE. (a) Prepare a partial income statement for Diamond in the Marigold Recruiting Group. The income statement should begin with income from continuing operations before income tax. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Diamond in the Marigold Recruiting Group Inc. Partial Income Statement December 31, 2020For the Month Ended December 31, 2020For the Year Ended December 31, 2020
Applicable Income Tax RecoveryIncome from Operations of the Discontinued Blue Division, less Applicable Income TaxApplicable Income TaxLoss from impairment of assets of Discontinued operations, less Applicable Income Tax RecoveryNet Income / (Loss)Income from Continuing Operations before Income TaxDiscontinued operationsIncome Tax ExpenseIncome from Continuing Operations				$
Income from Operations of the Discontinued Blue Division, less Applicable Income Tax Income from Continuing Operations Applicable Income Tax Recovery Income from Continuing Operations before Income Tax Income Tax Expense Discontinued operations Applicable Income Tax Loss from impairment of assets of Discontinued operations, less Applicable Income Tax Recovery Net Income / (Loss)
Applicable Income TaxLoss from impairment of assets of Discontinued operations, less Applicable Income Tax RecoveryDiscontinued operationsApplicable Income Tax RecoveryIncome Tax ExpenseIncome from Operations of the Discontinued Blue Division, less Applicable Income TaxNet Income / (Loss)Income from Continuing Operations before Income TaxIncome from Continuing Operations
Income Tax ExpenseIncome from Operations of the Discontinued Blue Division, less Applicable Income TaxIncome from Continuing Operations before Income TaxApplicable Income TaxDiscontinued operationsNet Income / (Loss)Loss from impairment of assets of Discontinued operations, less Applicable Income Tax RecoveryApplicable Income Tax RecoveryIncome from Continuing Operations
Applicable Income Tax RecoveryIncome from Operations of the Discontinued Blue Division, less Applicable Income TaxLoss from impairment of assets of Discontinued operations, less Applicable Income Tax RecoveryDiscontinued operationsIncome from Continuing Operations before Income TaxNet Income / (Loss)Income Tax ExpenseIncome from Continuing OperationsApplicable Income Tax		$
Applicable Income Tax RecoveryIncome from Continuing Operations before Income TaxIncome Tax ExpenseApplicable Income TaxNet Income / (Loss)Income from Continuing OperationsDiscontinued operationsLoss from impairment of assets of Discontinued operations, less Applicable Income Tax RecoveryIncome from Operations of the Discontinued Blue Division, less Applicable Income Tax
Loss from impairment of assets of Discontinued operations, less Applicable Income Tax RecoveryIncome from Continuing Operations before Income TaxIncome Tax ExpenseIncome from Continuing OperationsIncome from Operations of the Discontinued Blue Division, less Applicable Income TaxDiscontinued operationsApplicable Income Tax RecoveryNet Income / (Loss)Applicable Income Tax				$