On May 1, Foxtrot Co

question 151

Multiple Choice

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, 2018. 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 2018.
• Foxtrot's income tax rate is 40%.
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In the income statement for the year ended December 31, 2018, Foxtrot Co. would report:

• A) All income taxes combined into one line item.
• B) Income taxes separated for continuing and discontinued operations.
• C) Income taxes reported for income and gains only.
• D) None of these answer choices are correct.

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Definitions:

Retail Outlets

Physical stores or points of sale where consumers can purchase goods or services.

Retail Life Cycle

The retail life cycle refers to the process of growth and decline that retail outlets experience, similar to the life cycle of a product, including the stages of introduction, growth, maturity, and decline.

Market Share

The share of a market held by a certain company or product, usually represented as a proportion of the total market sales.

Profit Growth

An increase in the financial gain that results from the difference between a business's revenue and its expenses.