On July 4, Y2, ABC Inc. sold a component of their business to XYZ Inc....
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On July 4, Y2, ABC Inc. sold a component of their business to XYZ Inc. for $710,000. ABC determined the component would be discontinued in Y1 and properly reported the component in the discontinued operations section of the income statement. At 12/31/Y1, ABC estimated the fair value less cost to sell of the component to be $660,000, while the book value was $740,000. The pre-tax income of the component from January 1 - December 31 Y1 was $25,000.
During Y2, ABC had a pre-tax operating loss of $50,000 for the component. ABC is subject to a 40% income tax rate. Note: Use () to show a loss in your answer, if applicable.
1) Determine the net income/(loss) on operations from the discontinued component as of December 31, Y2: $__
2) Determine the net gain/loss on disposal from the discontinued component as of December 31, Y2: $__
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