Sovereign Foods suffered a $1,500,000 loss (net of tax) when the FDA prohibited the sale of food products containing red dye no.3.On its other products,Sovereign Foods had net sales of $6,580,000 and costs and other expenses of $6,505,000.Which of the following statements is not true? (Ignore taxes)
A) Sovereign Foods reports a net loss of $1,425,000 for the current year.
B) Sovereign Foods reports income before extraordinary items of $75,000.
C) Sovereign Foods combines the $1,500,000 loss with its other costs and expenses of $6,505,000,since this item does not qualify for any special disclosure.
D) Sovereign Foods shows the $1,500,000 loss in a separate section of the income statement as an extraordinary item.
Correct Answer:
Verified
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