On November 15, 2014, Jones Co. sold a segment of its business for $2,750,000. The net book
value of the segment at the time of its disposal was $2,900,000. Jones had pretax operating
income of $1,750,000 for 2014 which included $360,000 earned by the discontinued segment
prior to its disposal. Assume Jones' tax rate is 30%. Assume Jones' tax rate is 30%. Assume that
the disposition meets the criteria of ASU 2014-08.
Required:
Prepare a partial income statement for Jones Co. beginning with pretax income from continuing
operations.
Feedback: Sale price of segment - book value of segment = gain (loss) on disposal = $2,750,000
- $2,900,000 = $(150,000) pretax loss.
Operating income net of tax of (360000*30%=108000)= 360000-108000=252000
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Problem #1 – Discontinued Operations
