Question

Teal Mountain Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division’s assets with a book value of $1281000 are sold for $921000. Operating income from January 1 to June 30 for the division amounted to $210000. Ignoring income taxes, what total amount should be reported on Teal Mountain’s income statement for the current year under the caption, Discontinued Operations?

Answer 1

Answer:

$150,000 loss

Explanation:

The computation of the discontinued operation is shown below:

= operating income - loss on the sale of an asset

= $210,000 - $360,000

= $150,000 loss

where,  

The Book value of asset - sale value of asset denotes the loss on the sale of the assets

In mathematically,  

loss on the sale of assets = Book value of an asset - sale value of the asset  

                                    = $1,281,000 - $921,000

                                    = $360,000 loss