Stellar Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1 the division's assets with a book value of $840000 are sold for $600000. Operating income from January 1 to June 30 for the division amounted to $130000. Ignoring income taxes what total amount should be reported on Stellar's income statement for the current year under the caption Discontinued Operations?

Question

Quizplus · Accepted Answer

The loss on disposal of the division's assets is $840,000 - $600,000 = $240,000. The operating income from January 1 to June 30 is $130,000. The total amount to be reported on Stellar's income statement for the current year under the caption Discontinued Operations is $240,000 - $130,000 = $110,000 loss.