On November 1, 2010, Woods Company announced its plans to sell Division J (a component of the company). By December 31, 2010, Woods Company had not sold Division J and so it classifies the division as held for sale.During 2010, Woods Company recorded the following revenues and expenses for Division J and the remainder of the company.
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The company is subject to a 30% income tax rate.On December 31, 2010, the net book value of Division J is $500,000, consisting of assets of $910,000 and liabilities of $410,000. On this date, Woods Company estimates that the fair value of Division J is $420,000. The company had 50,000 shares of common stock outstanding during all of 2010.
Required:
1. Prepare the journal entry on December 31, 2010, to record the pretax loss on held for sale Division J. Show supporting calculations.
2. Prepare a 2010 multiple-step income statement for Woods Company.
3. Show how Division J would be reported on Woods Company's December 31, 2010 balancesheet.