Problem 33-1 (IFRS)

On September 30, 2020 when the carrying amount of the net assets of a business
segment was P70,000,000, Young Company signed a legally binding contract to sell the
business segment. The sale is expected to be completed by January 31, 2021 at a sale
price of P60,000,000. In addition, prior to January 31, 2021, the sale Contract obliged
Young Company to terminate the employment of certain employees of the business
segment incurring an expected termination cost of P2, 000, 000 to be paid on June 30,
2021.The segment revenue and expenses for 2020 were P40,000,000 and P45,000,000
respectively.
What amount should be reported as pretax loss from discontinued operation for 2020?
a. 17, 000, 000
b. 12, 000, 000
c. 15, 000, 000
d. 7, 000, 000

Problem 33-2 (IAA)

Booker Company committed to sell the comic book division, a component of the
business, on September 1, 2020. The carrying amount of the division was P4,000,000
and the fair value was P3,500,000. The disposal date is expected on June 1, 2021. The
division reported an operating loss of P200, 000 for the year ended December 31, 2020.
What amount should be reported as pretax loss from discontinued operation in 2020?
a. 500, 000
b. 200, 000
c. 700, 000
d. 0

Problem 33-3 (IFRS)

Zebra Company is a diversified entity with nationwide interests in commercial real
estate development, banking, mining and food distribution. The food distribution
division\'was deemed to be inconsistent with the long-term direction of the entity. On
October 1, 2020 the board of directors voted to approve the disposal of this division.
The sale is expected to occur in August 2021. The food distribution had revenue of P35,
000, 000 and expenses of P27, 000, 000 for the period January 1 to September 30, and
revenue of P15, 000, 000 and expenses of P10, 000, 000 for the period October 1 to
December 31. The carrying amount of the division’s net assets on December 31, 2020
was P55, 000, 000 and the fair value less cost of disposal was P60, 000, 000. The sale
contract required Zebra to terminate certain employees incurring an expected
termination cost of P4, 000, 000 to be paid by December 15, 2021. The income tax rate
is 30%.
What amount should be reported as income from discontinued operation for 2020?
a. 7,700,000
b. 8,300,000
c. 9,000,000
d. 6,300,000

Problem 334 (IAA)

Enron Company decided on August 1, 2020 to dispose of a component of business.
The component was sold on November 30, 2020. the net income for the current year
included income of P5, 000, 000 from operating the discontinued segment from January
to the date of disposal. The entity incurred a loss on the November 30, sale of
P1,000,000
What amount should be reported as pretax income or loss from discontinued operation
for 2020?
a. 1,000,000 loss
b. 5,000,000 income
c. 4,000,000 loss
d. 4,000,000 income