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On May 31, 20X1, the Arlene Corporation adopted a plan to sell its cosmetics line of...

On May 31, 20X1, the Arlene Corporation adopted a plan to sell its cosmetics line of business, considered a component of the entity. By the end of the year, the assets have not been sold. The book value of those assets equals $850,000, and the company estimates their fair value to be $1,100,000. The component generated operating income of $450,000 for the year. In its income statement for the year ended December 31, 20X1, for what amount would the company report income from operations of a discontinued component (ignoring taxes).

Multiple Choice

  • $300,000

  • $550,000

  • $450,000

  • $700,000

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Answer #1

correct option is "C"- 450000

Since the asset are not yet sold ,there is no gain or loss on sale of asset .

Income from discontinued operations 450000
Profit or loss on sale of asset 0
income from operations of a discontinued component 450000
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