Missoula Corporation disposed of one of its segments in the second quarter and incurred a gain from disposal of discontinued segment of $600,000,net of taxes.What is the effect of this gain from disposal of discontinued segment?
A)Increase net income from operations for the year by $600,000.
B)Increase second quarter net income by $600,000.
C)Increase each quarter's net income by $150,000.
D)Increase each of the last three quarters' net income by $200,000.

Question

Quizplus · Accepted Answer

The gain from disposal of discontinued segment is a one-time event and is recorded as an extraordinary item. Therefore, it only affects the period in which it occurred, which is the second quarter. It does not affect net income from operations for the year or the following quarters.

Missoula Corporation Disposed of One of Its Segments in the Second