Gregory Company is disposing of a component of its company. The net loss from the sale is estimated to be $600,000. Included in the $600,000 is termination pay of $100,000, which is directly associated with the decision to dispose of the component; and net losses from component asset write-downs of $400,000. Ignoring taxes, Gregory's income statement should report a loss on sale of a business component of
A) $100,000
B) $400,000
C) $500,000
D) $600,000

Question

Quizplus · Accepted Answer

The loss on sale of a business component should include all costs directly associated with the disposal, including termination pay and asset write-downs, totaling $600,000.

Gregory Company Is Disposing of a Component of Its Company