60.1K

Verified Solution

Link Copied!

On November $1,2022,$ Crane Corporation management decided to discontinue operation of its Rocketeer Division and approved a

formal plan to dispose of the division. Crane is a successful corporation with earnings of $$210\mathrm{.}00$ million or more before tax for each of

the past five years. The Rocketeer Division, a major part of Crane's operations, is being discontinued because it has not contributed to

this profitable performance.

The division's main assets are the land, building, and equipment used to manufacture engine components. The land, building, and

equipment had a net book value of $$58\mathrm{.}80$ million on November $1,2022.$

Crane's management has entered into negotiations for a cash sale of the division for $$50\mathrm{.}40$ million $($net of costs to sell$).$ The sale date

and final disposal date of the division is expected to be July $1,2023.$ Crane has a fiscal year ending May $31.$ The results of operations

for the Rocketeer Division for the $2022-2023$ fiscal year and the estimated results for June $2023$ are presented below. The before$-$tax

losses after October $31,2022,$ are calculated without depreciation on the building and equipment.

The Rocketeer Division will be accounted for as a discontinued operation on Crane's financial statements for the year ended May $31,$

Crane's tax rate is $25\%$ on operating income and all gains and losses. Crane prepares financial statements in accordance with

IFRS.Your answer is correct.

Indicate how the discontinued operations and pending sale of the Rocketeer Division would be reported on Crane's income

statement for the year ended May $31,2023.($Enter negative amounts using either a negative sign preceding the number e$.$g$.-45$ or

parentheses e$.$g$.(45).)$

Operations

$XXX

$5$:

the Rocketeer Division Less Applicable Income Tax Recovery

$

$2$ocketeer Division Assets Less Applicable Income Tax Recovery

$\{\begin{array}{c}\text{:}\text{\$}xxx\end{array}($c$)$

On July $5,2023,$ Crane disposed of the division's assets at an adjusted price of $$56\mathrm{.}00$ million. Indicate how the discontinued

operations and sale of the Rocketeer Division would be reported on Crane's income statement for the year ended May $31,2024.$

Assume the June $2023$ operating loss is the same as estimated. $($Enter negative amounts using either a negative sign preceding the

number e$.$g$.-45$ or parentheses e$.$g$.(45).$ Enter amounts in dollars.$)$

Income from Continuing Operations

Discontinued Operations:

$

Answer & Explanation Solved by verified expert

See Answer