During July 2012 Ralston Company decides to dispose of one of its subsidiaries which qualifies for accounting as a discontinued operation.At the July 2012 measurement date Ralston Company estimates that it will report net income of $200,000 dollars from the measurement date until the disposal date which is expected to be in April 2013.In addition,Ralston estimates that it will lose $300,000 on the sale of the segment.How much gain or loss on discontinued operations will Ralston report in its 2012 income statement (net of income taxes)?

Question

Quizplus · Accepted Answer

To calculate the gain or loss on discontinued operations, we need to take into account the income or loss from the measurement date until the disposal date and the loss on the sale of the segment. 
Net income from measurement date until disposal date = $200,000 
Loss on sale of the segment = -$300,000 
Therefore, the total loss on discontinued operations = -$100,000 
Since we are asked for the gain or loss net of income taxes, we would also need to consider the income tax effect. However, the information is not provided, so we cannot calculate it. 
Hence, the answer is C) $100,000 loss.

During July 2012 Ralston Company Decides to Dispose of One