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3 years ago

On May 1, Tango Co. agreed to sell the assets of its Formal Wear Division to Top Hat Inc.

Business

2 answers:

wariber [46]3 years ago

5 0

Answer:

For the year ended December 31, 2021, Tango would report:

Fair value of the assets = $40 million

Carrying Amount = $48 million

lower of the 2 values is fair value, which would reduce the carrying amount and result in impairment of $8 million which would be recognized in the income statement.

This expense is recognized in the income statement + pre-tax loss

= $8 million + $10 million = $18 million

less tax(25%) = $4.5 million

Total loss from discontinued operation = $18 million - $4.5 million = $13.5 million

Explanation:

As at December 31, 2021, the Division's assets were considered held for sale.

Therefore, the assets should be measured at the lower of carrying amount and fair value less costs to sell (IFRS 5 -Non-current Assets Held for Sale and Discontinued Operations) with a recognition of any arising impairment.

Any impairment loss that arises by using the measurement principles in IFRS 5 must be recognized in profit or loss.

beks73 [17]3 years ago

3 0

Answer:

This gives a net losses from discontinued of operations of $13.5m

After having deducted tax benefit of $4,5m

Explanation:

Kindly find attached spreadsheet showing of the computations from US GAAP's perspective

Mind the use of formulas highlighted before each calculation

Download xlsx

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