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
Q. Show the Break-even charts? Refers graphically profit and losses at different levels of sales volume achieved. When sales revenue is greater than total cost it m

(a) Calculate the number of US imports with and without the tariff. (b) Calculate the dead weight loss of the tariff. (c) Calculate the loss in consumer surplus resulting fro

In this exercise you will familiarize yourself with index models, beta and CAPM estimation. Download the spreadsheet data_question3.xlsx from Sakai and use the data contained there

for financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?

Determine the Single Limiting Factor A company manufactures and sells three products as A, B and C. The unit cost and revenue structure for every product and its maximum forec

Break-Even Chart This is a diagrammatic presentation of the relationship among costs, prices, expenses and the sales volume. A break-even chart expresses revenue and expens

Decision Making Cycle Steps in decision-making cycle are as: a) Clearly define the objective that is to be the focus of the decision. This is significant in order that the

A listed entity, had 3,000,000 $1 ordinary shares in issue, On 1 January 2009 CSA.CSA made a bonus issue of 1 for 3, On 1 May 2009. CSA issued 2,000,000 $1 ordinary shares for $3.2

10) Mike Taylor, the owner of Tennessee River Boat Rentals, is estimating the cost of operating his boat rental company next year. He expects to have 450 rentals during 200Z. The f