On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2021.

 On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2021.
 
The following additional facts pertain to the transaction:

The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations.
The book value of Footwear's assets totaled $48 million on the date of the sale.
Footwear's operating income was a pre-tax loss of $10 million in 2021.
Foxtrot's income tax rate is 25%.

In the income statement for the year ended December 31, 2021, Foxtrot Co. would report income from discontinued operations of:

 Multiple Choice

$24.5 million.


$16.5 million.



$14.0 million.


$22.0 million.

Answer

 $16.5 million

Explanation

75% (i.e., 1 – tax rate) × $22 million ($32 million gain on asset sale – $10 million operating loss)

Thanks