Determine the post-tax loss from discontinued operations

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Reference no: EM132842880

Problem - Presented below are the condensed income statement of Vital Corporation for the years ended December 31, 2020 and 2019:

	2020	2019
Sales	5,000,000	4,900,000
Cost of goods sold	3,350,000	3,300,000
Gross income	1,650,000	1,600,000
Operating expenses	675,000	650,000
Operating income	975,000	950,000
Gain on sale of division	200,000	0
Net income before income tax	1,175,000	950,000
Income tax expense (35%)	411,250	332,500
Net income	763,750	617,500

On October 10, 2020, Chalangs entered into an agreement to sell the assets of one of its geographical segments. The geographical segment comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company. The segment was sold on December 31, 2020, for P1,750,000. The book value of the segments assets was P1,550,000. The segments contribution to Chalangs' operating income before tax for each year was as follows:

2020 113,750 loss

2019 81,250 income

Assume that by December 31, 2020, the segment had not yet been sold but was considered held for sale. The fair value of the segment's assets on December 31 was P1,250,000. Determine the post-tax loss from discontinued operations for 2020?

Reference no: EM132842880

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