Elda Kevork & Co Vision

Turning Vision into Value

983 E. My Address (California, LA 98765-4321

Phone: (493) 7282928 ( Fax: (493) 8383930 ( http://site

December 1, 2020

Ms. Amelia Emerson, CPA

Controller

Travel-R-Us, Inc.

458 South Cruise Drive

California, LA 34520

Dear Ms. Emerson,

We are happy to advise you on the accounting for the sale of our ships and cruises division. We recommend reporting the sale as a discontinued business. This is recognized when a company tries to discard some of its components and separate them from their core business. The framework of generally accepted accounting principles requires that discontinued operations to help tell them apart from continued operations.

Rialto Components has been shown to be completely sold to Admiral Cruise Line. In this case, the income statement should report all the results of the sale and the operations of the component, including the gains and losses. Rialto gains and losses should be recognized at the date of sale as income from discontinued operation and a loss on disposal (FASB, 2017, ASC para.205-20-45-3). In the Period that a discontinued operation meets all the specifications required for it to be classified as 'held for sale,' the assets and liabilities of the discontinued operation should be presented separately in the income statement.

The gains or losses resulting from the sale of the ship and other net assets are reported as part of the income from the continuing operations before income taxes are included. These gains and losses form part of the income of the Travel Company, but they should be reported in the non-operating income. Not only the gains and losses resulting from the disposal of Rialto's components should be recognized from its disposal but also the results of the operation should be acknowledged. This is because under the operations, the income from the sale is a gain and is indicative of positive results.

There are two conditions that the components of Rialto ship should have for the sale to receive special placement in cash flow. First, the operations and cash flow of the components should be eliminated from the ongoing operations as disposal transaction. Secondly, following the disposal transaction, the company should relinquish all hold of Rialto's components and cease to have any continuing involvement in its operations (FASB, 2016, ASC para.205-20-45-1).

When reporting the aforementioned operations, it is advisable that the company acts with integrity and objectivity. This can be achieved by prioritizing the needs and interests of the shareholders and other key stakeholders. Based on the AICPA codes of ethics, all reporting decisions should be considerate of all stakeholders. They should also uphold the highest standards of honesty. Most importantly, they should adhere to the Accounting Standards without knowingly misrepresenting data and facts (AICPA, 2016, ET Section 1.100.001.01).

Please do not hesitate to contact me if you need more help on the matter.

Sincerely,

Helda Kevork, Partner.