Question

Chase Corp. had the following unusual transactions during 2017: A $450,000 gain from selling the only investment Chase has ever owned. A $630,000 gain on the sale of equipment. A $210,000 loss on the write-down of inventories. In its 2017 income statement, what amount should Chase report as total unusual net gains?

1) $240,000
2) $420,000
3) $870,000
4) $1,080,000

Answer 1

Chase Corp. should report $870,000 as total unusual net gains for 2017, by adding the gains from investment and equipment sales and then subtracting the inventory write-down loss.

Step-by-step explanation:

The student has asked what amount should Chase Corp. report as total unusual net gains in the 2017 income statement based on the provided transactions. To determine this, we add the gains and subtract the losses from the unusual transactions. The calculation will be as follows:

• $450,000 gain from investment
  
  
• $630,000 gain from sale of equipment
  
  
• ($210,000) loss on write-down of inventories

The total unusual net gains would be calculated as $450,000 + $630,000 - $210,000, which equals $870,000. Therefore, the correct amount that Chase Corp. should report as total unusual net gains for 2017 is $870,000.