Family Fashions Corporation Discontinued Kid-Choice, Its Entire Line of Children's

Family Fashions Corporation discontinued Kid-Choice, its entire line of children's clothing, in November of 2009. Prior to the disposal, Kid-Choice generated a loss of $600,000 (net of tax) for the period from January through the sale date. Because of the value of the real estate and machinery, there was a gain of $850,000 (net of tax) on the actual sale. How should this situation be reported in the financial statements of Family Fashions for 2009?

A) A $250,000 gain should be included in the 2009 income statement as an extraordinary item.
B) A $600,000 loss should be included in income from operations and a $850,000 gain should be reported in the "discontinued operations" section of the income statement.
C) A $250,000 adjustment to beginning retained earnings should be in the statement of retained earnings.
D) A $250,000 gain should be in the "discontinued operations" section of the income statement.