Reference no: EM133068328
Question - LAC Co. is a public company that decides to discontinue its operations on June 1, 2020. The building of the discontinued operations was purchased on January 1, 2016 for $700,000. The annual depreciation is $37,500. The fair value of the building on June 1, 2020 was $566,000. The costs to sell were $10,000.
The following information was provided for the 2020 year:
-Sales (including $120,000 generated by discontinued operations) was equal to $600,000
-Expenses (including $132,000 generated by discontinued operations before recording depreciation and impairment loss) was equal to $330,000
-Prepare the journal entries to record the depreciation for the building and its reclassification as held for sale in 2020. Assume value in use is lower than net realizable value.
-Prepare a revised statement of income for the year ended December 31, 2020 in good form, assuming the tax rate is 25%.
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: Prepare the journal entries to record the depreciation for the building and its reclassification as held for sale in 2020
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