On December 2, Year 1, Flint Corp.'s board of directors voted to discontinue operations of its frozen food division and to sell
the division's assets on the open market as soon as possible. This decision represents a major strategic shift for Flint and will have a significant effect on operations and financial results. The division reported net operating losses of $20,000 in December and $30,000 in January. On February 26, Year 2, sale of the division's assets resulted in a gain of $90,000. Assuming that the frozen food division qualifies as a component of the business and ignoring income taxes, what amount of gain/loss from discontinued operations should Flint recognize in its income statement for Year 2? A. 60,000
B. 90,000
C. 0
D. 40,000
The amount of gain that Flint should recognize in its income statement for year 2 is $60,000,option A.
Explanation:
The losses recorded in January is offset against the disposal proceeds of the asset,thereby leaving a gain of $60000($90000-$30000)
The losses recorded in December of year 1 is not relevant in computing gain or loss for year 2 as the losses would have been recorded since gains and losses from discontinued operations are expected to be reported same year.
The answer to this question is <span>concurrent control Concurrent control refers to the type of control by management in order to make sure that all employees are meeting the required regulations and standard. This type of control is used to make sure that employees will always meet company's expectation so the company could realize all of its planned goals.
In the case when the income would be increased by $1,000 per month so the spending on consumption goods would also be increased by 40% here we assume the 40%
So,
= $1,000 × 40%
= $400
Therefore based on the above assumption, the spending on consumption goods would be increased by $400
