On September 1, 2019, Barkeley Co. enters into a tentative agreement to sell the assets of its office equipment division. This division qualifies as a component of the entity according to IFRS regarding discontinued operations. The division's contribution to Barkeley's operating income for 2019 was a $3 million loss before taxes. Barkeley has an average tax rate of 28%. Assume that Barkeley had not yet sold the division's assets by the end of 2019. Further, assume that the fair value less costs to sell of the division's assets at December 31, 2019, was $24 million and was expected to remain the same when the assets are sold in 2020. The book value of the division's assets was $19 million at the end of 2019. Under these assumptions, what would Jacob report in its 2019 income statement regarding the office equipment division? Explain where this information would be presented. [Show your reason based on IFRS standard and your computation]
On September 1, 2019, Barkeley Co. enters into a tentative agreement to sell the assets of its office equipment division. This division qualifies as a component of the entity according to IFRS regarding discontinued operations. The division's contribution to Barkeley's operating income for 2019 was a $3 million loss before taxes. Barkeley has an average tax rate of 28%. Assume that Barkeley had not yet sold the division's assets by the end of 2019. Further, assume that the fair value less costs to sell of the division's assets at December 31, 2019, was $24 million and was expected to remain the same when the assets are sold in 2020. The book value of the division's assets was $19 million at the end of 2019. Under these assumptions, what would Jacob report in its 2019 income statement regarding the office equipment division? Explain where this information would be presented. [Show your reason based on IFRS standard and your computation]
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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Question
![On September 1, 2019, Barkeley Co. enters into a tentative agreement to sell the
assets of its office equipment division. This division qualifies as a component of the
entity according to IFRS regarding discontinued operations. The division's
contribution to Barkeley's operating income for 2019 was a $3 million loss before
taxes. Barkeley has an average tax rate of 28%.
Assume that Barkeley had not yet sold the division's assets by the end of 2019.
Further, assume that the fair value less costs to sell of the division's assets at
December 31, 2019, was $24 million and was expected to remain the same when the
assets are sold in 2020. The book value of the division's assets was $19 million at the
end of 2019. Under these assumptions, what would Jacob report in its 2019 income
statement regarding the office equipment division? Explain where this information
would be presented.
[Show your reason based on IFRS standard and your computation]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fef5c139c-1863-4de9-8013-8b6fe81045dd%2Fd18f9672-29df-4053-8b61-4ef9e0787547%2F5txvuyj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On September 1, 2019, Barkeley Co. enters into a tentative agreement to sell the
assets of its office equipment division. This division qualifies as a component of the
entity according to IFRS regarding discontinued operations. The division's
contribution to Barkeley's operating income for 2019 was a $3 million loss before
taxes. Barkeley has an average tax rate of 28%.
Assume that Barkeley had not yet sold the division's assets by the end of 2019.
Further, assume that the fair value less costs to sell of the division's assets at
December 31, 2019, was $24 million and was expected to remain the same when the
assets are sold in 2020. The book value of the division's assets was $19 million at the
end of 2019. Under these assumptions, what would Jacob report in its 2019 income
statement regarding the office equipment division? Explain where this information
would be presented.
[Show your reason based on IFRS standard and your computation]
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