On November 1, 2016, Woods Company announced its plans to sell its subsidiary, Williams Division (a major strategic component of the company). By December 31, 2016, Woods had not sold Williams Division and so it classifies the division as held for sale.

During 2016, Woods recorded the following revenues and expenses for Williams Division and the remainder of the company:

	Williams Division	Remainder of Company
Sales revenue	$170,000	$950,000
Cost of goods sold	119,000	560,000
Operating expenses	42,000	190,000

Woods is subject to a 30% income tax rate.

On December 31, 2016, the net book value of Williams Division is $500,000, consisting of assets of $910,000 and liabilities of $410,000. On this date, Woods estimates that the fair value of Williams Division is $420,000. The company had 50,000 shares of common stock outstanding during all of 2016.

Required:

1.

Prepare the journal entry on December 31, 2016, to record the pretax loss on held-for-sale Williams Division. Show supporting calculations.

2.

Prepare a 2016 multiple-step income statement for Woods.

3.

Show how Williams Division would be reported on Woodss December 31, 2016, balance sheet.

Prepare the journal entry on December 31, 2016, to record the pretax loss on held-for-sale Williams Division.

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GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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Supporting calculations:

The amount of the journal entry on December 31, 2016, to record the pretax loss on held-for-sale Williams Division is calculated as:

book value of net assets of discontinued Williams Division

income from operations of discontinued Williams Division

fair value of net asset of discontinued Williams Division

book value of net assets less fair value of net assets of discontinued Williams Division

Prepare a 2016 multiple-step income statement for Woods. Additional Instructions

WOODS COMPANY

Income Statement

For the Year Ended December 31, 2016

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1	Components of Income	Earnings per Common Share (50,000 shares)
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Show how Williams Division would be reported on Woodss December 31, 2016 balance sheet. Additional Instructions

WOODS COMPANY

Partial Balance Sheet

December 31, 2016

1	Assets		Liabilities
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