Reporting Discontinued OperationsDisposal in Subsequent Year

On October 1 of the current year, Blain Company approved a formal plan to sell the McKay Division, considered a component of the business. The sale will occur on March 31 of the following year. The division had operating income of $250,000 (pretax) for the year ended December 31, but expects to incur an operating loss of $50,000 for the first quarter of next year. Blain determines the carrying value and fair value (net of selling costs) of the McKay Division to be $2,500,000 and $2,400,000, respectively, on December 31. Blains tax rate for the year is 25%. Weighted average number of common shares outstanding in the current year is 150,000.

Required

a. Assume Blain Companys income from continuing operations is $1,150,000 (after tax) in the current year. 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 Division's net assets were $2,600,000 instead of $2,400,000 on December 31 ? Use a negative sign to indicate a loss. Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny