Reference no: EM132482424

Point 1: On October 5, 2020, Diamond in the Marigold Group Inc.‘s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 71% of its income from its human resources management practice. The Blue Division gets contracts to perform human resources management on an outsourced basis. The board decided to dispose of the division because of unfavourable operating results. Net income for Diamond was $94,710 for the ?scal year ended December 31, 2020 (alter a charge for tax at 30% and a?er a writedolwn for the Blue assets). Income from operations of the Blue Division accounted for $4,410 (after tax) of this amount. Because of the unfavourable results and the extreme competition, the board believes that it cannot sell the business intact. Its ?nal decision is to auction o?‘ the of?ce equipment.

Point 2: The equipment is the division's only asset and has a carrying value of $23,000 at October 5, 2020. The board believes that proceeds from the sale will be approximately $6,000 after the auction expenses. Currently, the equipment‘s estimated fair value is $9,600. The Blue Division quali?es for treatment as a discontinued operation. Diamond prepar? ?nancial statements in accordance with ASPE.

Question 1: Prepare a partial income statement for Diamond in the Marigold Group. The income statement should begin with income from continuing operations before income tax. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e9. (45).)