Reporting Discontinued OperationsDisposal in Subsequent Year

On October 1, 2020, Blain Company approved a formal plan to sell the McKay Division, considered a component of the business. The sale will occur on March 31, 2021. The division had operating income of $500,000 (pretax) for the year ended December 31, 2020, but expects to incur an operating loss of $100,000 for the first quarter of 2021. Blain determines the carrying value and fair value (net of selling costs) of the McKay Division to be $5,000,000 and $4,800,000, respectively, on December 31, 2020. Blains tax rate for 2020 is 25%. Weighted average number of common shares outstanding in 2020 is 300,000.

Required

a. Assume Blain Companys income from continuing operations is $2,300,000. Prepare a partial income statement beginning with income from continuing operations. Include earnings per share disclosures.

• Use a negative sign to indicate a loss.
• Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny

b. How does the answer to part a change if the fair value of the McKay Divisions net assets were $5,200,000 instead of $4,800,000 on December 31, 2020?

• Use a negative sign to indicate a loss.
• Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny.

Discontinued operations Impairment loss on discontinued component, net of tax savings $ Per share: A TA Impairment loss on discontinued, component, net of tax savings $ $ Discontinued operations Impairment loss on discontinued component, net of tax savings $ Per share: A $ Impairment loss on discontinued, component, net of tax savings $