Stober, Ltd.decided on January 1, 2011 to discontinue its plastic making division.The division, considered a reportable segment, was sold on June 1, 2011.Division assets with a carrying value of $650,000 were sold for $500,000.Operating income from January 1, to May 30, 2011 for the division amounted to $80,000.Ignoring taxes, what amount should be reported on Stober's income statement for the year ended December 31, 2011, under the caption "discontinued operations"?
A)$230,000 gain
B)$80,000 gain
C)$150,000 loss
D)$70,000 loss

Question

Quizplus · Accepted Answer

The loss on the sale of the division is $150,000 ($650,000 carrying value - $500,000 sale price). The operating income from January 1 to May 30 is $80,000. The net effect on discontinued operations is a $70,000 loss ($150,000 loss - $80,000 income).