Question

Marin Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division’s assets with a book value of $1285000 are sold for $925000. Operating income from January 1 to June 30 for the division amounted to $214000. Ignoring income taxes, what total amount should be reported on Marin’s income statement for the current year under the caption, Discontinued Operations?

$214000
$146000 loss
$574000
$360000 loss

Answer 1

$146000 loss

Step-by-step explanation:

Discontinued operation: represent the result of the lines or business activitied that have been closed thus, will no longer generate cash flow for the company.

In this case we got two result from the discontinued operation:

the operating income from the period and the disposal of the assets related to this activity.

loss at disposal:

925,000 - 1,285,000 = (360,000)

operating gain 214,000

Total loss: 146,000