What would Jacob report in its income statement

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Problem - On September 1, 2016, Jacob Furniture Mart enters into a tentative agreement to sell the assets of its office equipment division. This division qualifies as a component of the entity according to GAAP regarding discontinued operations. The division's contribution to Jacob's operating income for 2016 was a $3.30 million loss before taxes. Jacob has an average tax rate of 30%.

Scenario - Assume that Jacob had not yet sold the office furniture division by the end of 2016. Further, assume that the fair value less costs to sell of the division's assets at December 31, 2016, was $12.30 million and was expected to remain the same when the assets are sold in 2017. The book value of the division's assets was $19.27 million at the end of the year.

Required - Under these assumptions, what would Jacob report in its 2016 income statement regarding the office equipment division?

Reference no: EM132472215

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