Question

On October 28, 2021, Zebra Technologies Corporation committed to a plan to sell a division that qualified as a component of the entity according to GAAP regarding discontinued operations and was properly classified as held for sale on December 31, 2021, the end of the company's fiscal year. The division's loss from operations for 2021 was $1,940,000. The division's book value and fair value less cost to sell on December 31 were $3,130,000 and $2,300,000, respectively. What before-tax amount(s) should Zebra Technologies Corporation report as loss on discontinued operations in its 2021 income statement

Answer 1

$2,770,000

Explanation:

The computation of loss on discontinued operations is shown below:-

Loss on disposal of discontinued division = Book value of assets of discontinued division - Fair value of assets of discontinued division

= $3,130,000 - $2,300,000

= $830,000

Loss on discontinued operations = Loss on operations of discontinued division + Loss on disposal of discontinued division

= $1,940,000 + $830,000

= $2,770,000