Chase Corp. had the following infrequent transactions during 2014:A $375,000 gain from selling the only investment Chase has ever owned.A $525,000 gain on the sale of equipment.A $175,000 loss on the write-down of inventories.In its 2014 income statement, what amount should Chase report as total infrequent net gains that are not considered extraordinary?
A) $200,000.
B) $350,000.
C) $725,000.
D) $900,000.

Question

Quizplus · Accepted Answer

Infrequent gains and losses are reported separately from ordinary income and expenses but are not considered extraordinary items. Therefore, the $375,000 gain from selling the investment and the $525,000 gain on the sale of equipment are both infrequent gains that should be reported in the income statement. The $175,000 loss on the write-down of inventories is also an infrequent item that should be reported. The total of these amounts is $725,000. However, since the question asks for net gains, we must subtract the $175,000 loss from the total infrequent gains, resulting in a total infrequent net gain of $550,000. Therefore, the correct answer is B, $350,000 (the amount of infrequent net gains).