KC Plastics Inc. (KC) has decided to discontinue the operations on September 1st, of its mold making
division. The low prices from foreign corporations makes them not competitive. The mold making is not a separate division but is a significant operating segment both financially and operationally. The company sold the operations on October 15, 2019 to SF 49 Inc. (SF), and the liabilities will be assumed by purchaser. The sale details are:
Purchase Price paid by SF $10,000,000 Liabilities assumed by SF (fair value) $1,350,000 Division assets, book value at September $800,000 Division assets, estimated fair value, September $750,000 Division Revenue to October 15, 2019 5,000,000 Division Profit before taxes to October 15, 2019 $100,000 Income Tax Rate 27%
On December 31, 2019, the after-tax income, including the mold division, was $1,000,000.
1. Complete the entries to record the sale of the mold making division.
2. Complete the entries for the reclassification.
3. With the information provided, complete 2019 income statement, starting with the income from continuing operations, after tax.
4. Explain if required any and all reclassifications and disclosures in the 2018 comparative financial statements and notes.
1.Journal entry is given in the explanation part. 2.Reclassification entry is passed in the... View the full answer