Question

On May 31, 20X1, the Arlene Corporation adopted a plan to sell its cosmetics line of business, considered a component of the entity. The assets of the component were sold on October 13, 20X1, for $1,120,000. The component generated operating income of $300,000 from January 1, 20X1, through disposal. In its income statement for the year ended December 31, 20X1, the company reported before-tax income from operations of a discontinued component of $620,000. What was the book value of the assets of the cosmetics component

Answer 1

$800,000

Step-by-step explanation:

Calculation to determine the book value of the assets of the cosmetics component

Assets of the component $1,120,000.

Less gain on sale of the assets ($320,000)

($620,000-$300,000)

Book value of the assets $800,000

($1,120,000-$320,000)

Therefore the book value of the assets of the cosmetics component will be $800,000