【正文】 scontinued operations before the disposal decision. ? Gain or loss from disposal of a segment. Discontinued Operations Chapter 368 Ine from continuing operations $93,000 Results from discontinued operations: Ine from operations of discontinued Division X ( of $2,880 ine taxes) $ 6,720 Loss on disposal of Division X ( of $6,000 ine tax credit) (14,000 ) (7,280 ) Ine before extraordinary items $85,720 Reported of taxes Reported of taxes Ine Statement: Results from Discontinued Operations Chapter 369 Note that discontinued operations are reported on the ine statement after the continuing operations, but before extraordinary items. Ine Statement: Results from Discontinued Operations Chapter 370 Ine from continuing operations $93,000 Results from discontinued operations: Ine from operations of discontinued Division X ( of $2,880 ine taxes) $ 6,720 Ine before extraordinary items $85,720 Element 1: operating ine (loss) Ine Statement: Results from Discontinued Operations Chapter 371 Ine from continuing operations $93,000 Results from discontinued operations: Ine from operations of discontinued Division X ( of $2,880 ine taxes) $ 6,720 Loss on disposal of Division X ( of $6,000 ine tax credit) (14,000 ) (7,280 ) Ine before extraordinary items $85,720 Element 2: gain or loss on disposal Ine Statement: Results from Discontinued Operations Chapter 372 On September 30, 2022, Duvall Company sells Division C (a ponent of its operations) for $102,000 and incurs $2,000 of legal fees and closing costs. At the time of the sale, the book values of Division C’s assets and liabilities are $150,000 and $80,000, respectively. Duvall Company is subject to a 30% ine tax rate. Sale Illustration Continued Ine Statement: Results from Discontinued Operations Chapter 373 Net cash received ($102,000 – $2,000) $100,000 Book value of assets of Division C: Assets $150,000 Liabilities (80,000 ) Net book value (70,000 ) Pretax gain $ 30,000 Ine tax (30%) (9,000 ) Aftertax gain $ 21,000 Sale Illustration Chapter 374 When a pany classifies a significant ponent as held for sale, it records and reports the ponent at the lower of (1) its book value (book value of assets minus book value of liabilities) or (2) its fair value (the amount at which the assets and liabilities as a whole could be sold in a current single transaction) less any cost to sell. Sale in a Later Accounting Period Chapter 375 Elmo Company classifies Division M (a significant ponent of its operations) as “held for sale” at the end of 2022. Elmo Company expects to sell Division M in 2022 at its fair value of $200,0000 (consisting of assets with a fair value of $300,000 and liabilities with a fair value of $100,000). At the end of 2022, the book value of Division M is $240,000 (assets book value, $330,000。 liabilities book value, $90,000). The pany is subject to a 30% ine tax rate. Continued Sale in a Later Accounting Period Chapter 376 Fair value of Division M $200,000 Book value of assets of Division M: Assets $330,000 Liabilities (90,000 ) Net book value (240,000 ) Pretax loss $ (40,000 ) End of 2022 Loss on WriteDown of HeldForSale Division M (pretax) 40,000 Liabilities of Division M 10,000 Assets of Division M 30,000 Chapter 377 Disclosures Required by FASB Statement No. 144 ? A description of the facts and circumstances leading up to the sale, and, if heldforsale, the expected manner and timing of the sale. ? The revenues and pretax ine (loss) of the ponent included in its operating ine (loss) reported in the results of discontinued operations section of the pany’s ine statement. Continued Ine Statement: Results from Discontinued Operations Chapter 378 Disclosures Required by FASB Statement No. 144 ? If not reported separately on its ine statement, the gain (loss) on the sale and the caption on the ine statement that includes the gain (loss). ? If not separately reported on its balance sheet, the book value of the major classes of assets and liabilities. Ine Statement: Results from Discontinued Operations Chapter 379 ? Change in estimates ? Change in accounting principle ? Change in reporting entity Reporting Accounting Changesc Chapter 380 ? Revision of a previous accounting estimate. ? The new estimate should be used in the current and future periods. ? The prior accounting results should not be disturbed –FASB Statement No. 154. Change in Estimates Chapter 381 On January 1, 19X5, we purchased equipment costing $30,000, with a useful life of 10 years and no salvage value. During 19X8, we determine that the remaining useful life is 5 years (8year total life). We use straightline depreciation. ? Calculate depreciation expense for 19X8 based upon this new estimate. Change in Estimates Example Chapter 382 A s s e t c os t 3 0 , 0 0 0$ A c c um ul a t e d de pr e c i a t i on 1 2 / 3 1 / X 7 ( $ 3 , 0 0 0 3 y e a r s ) ( 9 , 0 0 0 ) R e m a i ni ng t o be de pr e c i a t e d 2 1 , 0 0 0 R e m a i ni ng us e f ul l i f e 247。 5 y e a r sR e v i s e d a nn ua l de pr e c i a t i on 4 , 2 0 0$ Record depreciation expense of $4,200 for 19X8 and subsequent years. Change in Estimates Example Chapter 383 ? Occurs when changing from one GAAP method to another GAAP method. ? Make a catchup adjustment known as the cumulative effect of a change in accounting principle. ? The cumulative effect is reported of taxes and directly after the beginning retained earnings amount on the pany’s retained earnings