Question

On November 1, 2016, Jamison Inc. adopted a plan to discontinue its barge division, which qualifies as a separate component of the business according to GAAP regarding discontinued operations. The disposal of the division was expected to be concluded by April 30, 2017. On December 31, 2016, the company's year-end, the following information relative to the discontinued division was accumulated: Operating loss Jan. 1 – Dec. 31, 2016 $71 million Estimated operating losses, Jan. 1 to April 30, 2017 94 million Excess of fair value, less costs to sell, over book value at Dec. 31, 2016 16 million In its income statement for the year ended December 31, 2016, Jamison would report a before-tax loss on discontinued operations of: Multiple Choice $149 million. $71 million. $55 million. $165 million.

Answer 1

Jamison Inc.

Discontinued Divisional Loss:

$149 million.

Step-by-step explanation:

a) Data and Calculations:

December 31, 2016 Operating Loss = $71 million

Jan. 1 to April 30 Estimated operating loss = $94 million

Less Unrealized Gain on fair value $16 million

Before-Tax Loss on discontinued operations $149 million

b) Discontinued operations of Jamison Inc. must be reported separately in the balance sheet, the income statement, and the statement of cash flows. This separation treatment enables user of the financial information to understand the different sources of income or loss.