The Gordon Company is disposing of a component of its company.The net loss from the sale is estimated to be $500, 000.Included in the $500, 000 is termination pay of $100, 000, which is directly associated with the decision to dispose of the component; and net losses from component asset write-downs of $400, 000.Ignoring taxes, Gordon's income statement should report a loss on sale of a business component of
A)$100, 000
B)$600, 000
C)$400, 000
D)$500, 000

Question

Quizplus · Accepted Answer

The loss on sale of a business component should include all costs directly associated with the disposal, which includes both the termination pay of $100,000 and the net losses from asset write-downs of $400,000, totaling $500,000.

The Gordon Company Is Disposing of a Component of Its