Question

On April 30, 2005, Carty Corp. approved a plan to dispose of a segment of its business. The disposal loss is $480,000, including severance pay of $55,000 and employee relocation costs of $25,000, both of which are directly associated with the decision to dispose of the segment. The firm is a calendar-fiscal year firm, and the segment's operating loss for the entire year (2005) through the date of disposal was $120,000.Before income taxes, what amount should be reported in Carty's income statement for the year ended December 31, 2005, as the total income effect (loss) from discontinued operations?A. $600,000B. $480,000C. $120,000D. $360,000

Answer 1

A.- $600,000

Step-by-step explanation:

There is the loss from discontinued operations $120,000 (from the segment operations)

And the loss from the disposal of the segment of the business which is $480,000

In total the income effect from discontinued operation will be a loss for $600,000