Assume that the fair value of these assets

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Reference no: EM131264569

On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The following additional facts pertain to the transaction:

* The Footwear Division operations and cash flows can be clearly distinguished operationally and for financial reporting purposes from the rest of Foxtrot Co.

* Footwear's assets totaled $48 million on Foxtrot's book at the time of sale.

* Footwear's contribution to Foxtrot's operating income was a pre-tax loss of $10 million in 2006.

* Foxtrot's income tax rate is 40%.

Suppose that the Footwear Division's assets had not been sold by December 31, 2006, but were considered held for sale. Assume that the fair value of these assets at December 31 was $40 million. In the 2006 income statement for Foxtrot Co., under discontinued operations it would report a ____:

A. $18 million loss

B. $10.8 million loss

C. $10 million loss

D. $ 3 million loss

Reference no: EM131264569

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