In 2011,Axle Corporation Sold Its Computer Software Division to Slight

question 62

Essay

In 2011,Axle Corporation sold its computer software division to Slight Technology.During the year of the sale,the division generated a profit of $425,000 before taxes and paid $183,750 in taxes.The division was sold for $4,000,000 more than its book value and the taxes on this gain were $870,000.
Required: Show how these amounts would be reported on Axle's income statement for the year ended December 31,2011.

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Definitions:

Annuity

A finance tool that disburses a predetermined series of payments, typically to support individuals financially during retirement.

Future Value

The value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.

Retirement Income

The total income a person receives after retiring from work, which can come from pensions, savings, investments, and social security benefits.

Compounded Semi-Annually

Interest added to the principal of a deposit or loan every six months, affecting total interest earned or paid.