Question

During 2017, Carla Vista Co. disposed of Pine Division, a major component of its business. Carla...

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

Homework Answers

Answer #1

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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