If plant assets of a manufacturing company are sold at a gain of $820,000 less related taxes of $250,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as

Question

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The gain of $820,000 should be reported as an increase in operating income, and the related taxes of $250,000 should be reported as an increase in income tax expense, resulting in a net increase in income of $570,000. Option A correctly reflects this treatment. Option B is incorrect because it does not account for the taxes paid on the gain. Option C is incorrect because prior period adjustments are unrelated to the sale of plant assets. Option D is incorrect because the gain is not considered extraordinary.

If Plant Assets of a Manufacturing Company Are Sold at a Gain