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, 2021. 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 2021. Foxtrot's income tax rate is 25%. In the income statement for the year ended December 31, 2021, Foxtrot Co. would report:

Foxtrot Co.

In the income statement for the year ended December 31, 2021, Foxtrot Co. would report:

the disposal (profit from disposal of division totaling $32 million) after operating pre-tax loss of $10 million and this will turn the operating pre-tax loss to a net pre-tax income of $22 million.

Explanation:

Proceeds from sale of assets of the Footwear Division = $80 million

Book value of Footwear's assets = $48 million

Gain from disposal = $32 million

Income Statement for the year ended December 31, 2021:

Footwear Division:

Operating Income (Loss)           ($10,000,000)

Gain from disposal of division     32,000,000

Pre-tax income                           $22,000,000

Income tax (25%)                            5,500,000

After-tax income                         $16,500,000

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