During July 2013,Ralston Company decides to dispose of one of its subsidiaries,which qualifies for accounting as a discontinued operation.At the July 2013 measurement date,Ralston Company estimates that it will report net income of $300,0000 dollars from the measurement date until the disposal date,which is expected to be in April 2014.In addition,Ralston estimates that it will lose 100,000 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

The gain or loss on discontinued operations is calculated as the difference between the estimated net income from the measurement date to the disposal date and the estimated loss on the sale of the segment. In this case, the estimated net income is $300,000 and the estimated loss on the sale is $100,000, so the gain or loss on discontinued operations is $200,000.

During July 2013,Ralston Company Decides to Dispose of One of Its