King Corporation decided to sell its sporting goods business segment for $900,000, on September 1, Year 1, which is also the disposal date. The book value of the segment's net assets is $700,000 on this date. The pre-tax income for the segment for the period January 1 - September 1, Year 1, was $20,000. Assuming a tax rate of 40%, choose the correct reporting for discontinued operations in the income statement of King Corporation, for the year ended December 31, Year 1. $$\begin{array} { | l | l | }
\hline &\text { Income (loss) from Discontinued operations } & \text { Gain (loss) from disposal of ciscontinued operations } \
\hline 1& \$ 20,000 & \$ 200,000 \
\hline 2& \$ 132,000 & \$ 0 \
\hline 3& \$ 12,000 & \$ 120,000 \
\hline 4 &\$ 0 & \$ 132,000 \
\hline
\end{array}$$

Question

King Corporation decided to sell its sporting goods business segment for $900,000, on September 1, Year 1, which is also the disposal date. The book value of the segment's net assets is $700,000 on this date. The pre-tax income for the segment for the period January 1 - September 1, Year 1, was $20,000. Assuming a tax rate of 40%, choose the correct reporting for discontinued operations in the income statement of King Corporation, for the year ended December 31, Year 1. $$\begin{array} { | l | l | } 
\hline &\text { Income (loss) from Discontinued operations } & \text { Gain (loss) from disposal of ciscontinued operations } \
\hline 1& \$ 20,000 & \$ 200,000 \
\hline 2& \$ 132,000 & \$ 0 \
\hline 3& \$ 12,000 & \$ 120,000 \
\hline 4 &\$ 0 & \$ 132,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of King Corporation decided to sell its sporting goods business segment for $900,000, on September 1, Year 1, which is also the disposal date. The book value of the segment's net assets is $700,000 on this date. The pre-tax income for the segment for the period January 1 - September 1, Year 1, was $20,000. Assuming a tax rate of 40%, choose the correct reporting for discontinued operations in the income statement of King Corporation, for the year ended December 31, Year 1. $$\begin{array} { | l | l | } 
\hline &\text { Income (loss) from Discontinued operations } & \text { Gain (loss) from disposal of ciscontinued operations } \
\hline 1& \$ 20,000 & \$ 200,000 \
\hline 2& \$ 132,000 & \$ 0 \
\hline 3& \$ 12,000 & \$ 120,000 \
\hline 4 &\$ 0 & \$ 132,000 \
\hline
\end{array}$$

King Corporation Decided to Sell Its Sporting Goods Business Segment