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On August 14, Malik's Melons, Inc. agreed to sell its Cantelopes division to Lori's Lemons and Limes, Ltd. for $75 million. The sale was completed
On August 14, Malik's Melons, Inc. agreed to sell its Cantelopes division to Lori's Lemons and Limes, Ltd. for $75 million. The sale was completed on the last day of 20x1.
The following additional facts pertain to the transaction:
- The Cantelopes division qualifies as a component of the entity according to GAAP regarding discontinued operations.
- Malik's income tax rate is 20%.
- The book value of the Cantelopes division's assets totaled $40 million on the date of the sale.
- The Cantelopes division had a pre-tax operating loss of $5 million in 20x1.
Malik's Melons' income statement for the year ended December 31, 20x1 would report income from discontinued operations of:
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