Katherine's Fashions is going to discontinue one of its manufacturing divisions.The division's assets with a book value of $1,000,000 are sold for $750,000.The division generated an operating loss of $145,000 after the decision was made to discontinue the segment.Ignoring income taxes,what total amount should be reported on the income statement as discontinued operations?
A)$105,000 loss
B)$250,000 loss
C)$395,000 loss
D)$145,000 gain

Question

Quizplus · Accepted Answer

The amount to be reported on the income statement as a loss from discontinued operations is calculated as follows:

Sale of assets: $750,000
Book value of assets: $1,000,000
Loss on sale of assets: $250,000

Operating loss: ($145,000)

Total loss from discontinued operations: $395,000 (Option C)

Katherine's Fashions Is Going to Discontinue One of Its Manufacturing