Prepare blue jays partial income statement

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Reference no: EM132951432

Question

On November 1, 2019, Blue Jays Corporation management decided to discontinue the operation of its White Sox Division and approved a formal plan to dispose of the division. The division's main assets consist of land, building, and equipment used to manufacture engine components. This group of assets had a net book value of $42 million on November 1, 2019. With the engagement of a chartered valuator, Blue Jays' management has estimated the fair value of these assets, net of costs to sell is $36 million. The before-tax loss of this division from June 1, 2019, to May 31, 2020, is $4.1 million. The White Sox Division will be accounted for as a discontinued operation on Blue Jays' financial statement for the year ended May 31, 2020. Blue Jays' tax rate is 25% on operating income and all gains and losses. Blue Jays prepares financial statements under IFRS.

Instructions
a) Explain how the White Sox Division's assets would be reported on Blue Jays Corporation's statement of financial position as of May 31, 2020.

b) Prepare Blue Jays' partial income statement for the 12-month ended May 31, 2020. The statement should begin with net income from continuing operation of $60 million, ignore other comprehensive income.

c) Include an appropriate footnote presenting the breakdown of the total gain or loss from the discontinued White Sox division. The sales of the division are expected to complete sometime in July 2020.

Reference no: EM132951432

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