Bramble, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division’s assets with a book value of $1272000 are sold for $898000. Operating income from January 1 to June 30 for the division amounted to $200000. Ignoring income taxes, what total amount should be reported on Bramble’s income statement for the current year under the caption, Discontinued Operations?

The amount should be reported on Bramble’s income statement for the current year under the caption, Discontinued Operations is a loss of $-174,000

Explanation:

According to the given data we have the following:

Income from Discontinued operation=$200,000

Loss on sale of Assets of discontinued operation=division’s assets book value-price sold

Loss on sale of Assets of discontinued operation=$1,272,000-$898,000

Loss on sale of Assets of discontinued operation=$374,000

Therefore, The amount should be reported on Bramble’s income statement for the current year under the caption, Discontinued Operations can be calculated as follows:

amount should be reported on Bramble’s income statement=Income from Discontinued operation+Loss on sale of Assets of discontinued operation

amount should be reported on Bramble’s income statement=$200,000-$374,000

amount should be reported on Bramble’s income statement=$-174,000

The amount should be reported on Bramble’s income statement for the current year under the caption, Discontinued Operations is a loss of $-174,000

Discontinued operations= $374,000 loss

Explanation:

Discontinued operations is defined as the part of a companie's operations that has been shut down or divested from normal or continued operations.

Discontinued operations are reported seperately from the companie's normal operations.

To calculate discontinued operation we find difference between the sale price of the division and the fair value, and minus transaction cost too.

In this scenario

Discontinued operations= Sale price - Book value

Discontinued operations= 898,000 - 1,272,000

Discontinued operations= $374,000 loss

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