Gain on the sale of the discontinued operation, Cost Accounting

NSC Ltd. has a 31 May fiscal year-end. NSC disposed of its Information Systems Group (ISG) on 31 January 20X3. ISG had a net loss (after taxes) of $37,700,000 in 20X3, to the date of disposal. The division was sold for $475,600,000 in cash plus future royalties through 31 May 20X4, which were guaranteed to be $30,000,000. The minimum guaranteed royalties were included in the computation of the 20X3 gain on the sale of the division. Actual royalties received in 20X4 were $35,500,000. Excerpts from comparative income statements found in the 31 May 20X4 financial statements are as follows:

($ millions) Year ended 31 May                                                                  20X4             20X3

Earnings (loss) from continuing operations                                                   $(29.3)          $(205.5)

Discontinued operations:

Gain on sale of discontinued operation (net of income taxes of $1.2 in 20X4 and $34.0 in 20X3)

                                                                                                             4.3               182.3

Net income (loss)                                                                                    $(25.0)         $ (23.2)


1.Determine the net book value of ISG at the date of disposal.

2.Why does NSC report a gain on the sale of the discontinued operation of $4,300,000 in the year ending 31 May 20X4?

3.NSC reports an after-tax loss from discontinued operations of $37,700,000 for the year ending 31 May 20X3. Over what period was the loss accrued?

Posted Date: 5/10/2013 1:59:50 AM | Location : United States

Related Discussions:- Gain on the sale of the discontinued operation, Assignment Help, Ask Question on Gain on the sale of the discontinued operation, Get Answer, Expert's Help, Gain on the sale of the discontinued operation Discussions

Write discussion on Gain on the sale of the discontinued operation
Your posts are moderated
Related Questions
You work for a firm of accountants as a junior accounts assistant and part of your role is to prepare clients' ledgers accounts from incomplete records. A client of the firm you

Using the  information provided prepare  the four financial  statements  for inclusion in Plantagenet Ltd's Annual Report dated at its balance date of 30th June 2011. The statement

what would your answer be to the following problem, please show detailed calculations: The XYZ Company manufacturers Part 123 for use in its production line. The manufacturering co

Business Management Business Management includes planning and staffing, organizing, directing and controlling an organization's activities so like to meet a specified objectiv

A company provides several different services to its customers from a single office. Fixed costs of the office, including staff costs, are absorbed into the company's service costs

o locate a store, but the location manager is not sure about the rent method to accept. The mall operator offers the following three options for its retail store rentals: 1. paying

Baka Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on t

The  basic  principles  of  standard  costing  and  variance  analysis  may  be  adapted  to  the needs of  relatively  new  methods  of  accounting  such  as  activity-based  cost

from the following particulars calculate the earning of worker . rate per hours $0.50 standard time 200 hours time taken 140 hours