During 2017, Carla Vista Co. disposed of Pine Division, a major
component of its business. Carla Vista realized a gain of $2970000,
net of taxes, on the sale of Pine's assets. Pine's operating
losses, net of taxes, were $3490000 in 2017. How should these facts
be reported in Carla Vista's income statement for 2017?
Total Amount to be Included in | |||
Income from | Results of | ||
Continuing Operations | Discontinued Operations |
520000 loss | 0 |
0 | 520000 loss |
2970000 gain | 3490000 loss |
$3490000 loss | $2970000 gain |
Gain on sale of assets of discontinued division, net of taxes = $2,970,000
Loss on operations of discontinued division, net of taxes = $3,490,000
Since both the gains and loss relate to discontinued division, hence none of the above will be shown under income from continuing operations.
Income Statement | |
Discontinued operations: | |
Gain on sale of assets of discontinued division, net of taxes | 2,970,000 |
Loss on operations of discontinued division, net of taxes | -3,490,000 |
Loss | $520,000 |
Second option is correct.
520000 loss.
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