CPA Study Group
What amount will be reported in the bottom of Year 2 income statement? Is it $90,000? Operating income $20,000+ Gain on disposal $70,000
$70 k is the cost necessary to sell the division, no gains.
Exps for disposal Dr 70
Bank Cr 70
Bank Dr 570
Paper Division Cr 500
Exps for disposal Cr 70
Loss on disposal was recognized in yr 1 and asset was reported @ 500.
Do we get operating income after it was discontinued operation? if any, then it is reported as income for Jan and feb portion.