Barcelona Inc.’s manufacturing division lost $140,000 (net of tax) for the year ended December 31, 2020....

Barcelona Inc.’s manufacturing division lost $140,000 (net of tax) for the year ended December 31, 2020. Barcelona estimates that it can sell the division at a loss of $190,000 (net of tax). The division qualifies for treatment as a discontinued operation.

Instructions

Explain how the discontinued operation would be measured and presented on the income statement and balance sheet under ASPE.
Explain how your answer to part (a) would be different if Barcelona prepared financial statements in accordance with IFRS.

Expert Solution

Part(a) Measurement and Disclosure of Discontinue operations under ASPE:

INCOME STATEMENT: The Profit or Loss(After Tax) from discontinue operations should be SHown as separate item in income statement however any estimated losses on the sale of operations is not accrued in ASPE.

BALANCE SHEET: Assests and Liabilities held for sale of discontinue operations should be shown seprately in category of assest or liability held of sale in Balance sheet.

Part(b) Under IFRS, If any Loss measured on asset or liability held for sale should be recognised immeditely and presented as separate item in income statement. in that case, profit and gain from discontinue operations will include below items:

Profit or loss(after Tax) from discontinue operations and loss (after tax) from measurement of sale price of division held for sale.

Under IFRS, In Balance sheet , Same treatment for assets and liabilities as in ASPE.

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