On January 1, 2020, Bellair Ltd. decided to discontinue its plastics making division. The division, considered a reportable segment, was sold on June 1, 2020. Division assets with a carrying value of $812,500 were sold for $625,000. Operating income from January 1 to May 31 for the division was $62,500. Ignoring taxes, what amount should be reported on Bellair's income statement for the year ended December 31, 2020, under the caption "discontinued operations"?

Question

Quizplus · Accepted Answer

The loss from discontinued operations includes the operating income of $62,500 and the loss on sale of assets ($812,500 - $625,000 = $187,500). The total loss is $187,500 - $62,500 = $125,000.