On December 31, 2021, the end of the fiscal year, the Wainwright Corporation completed the sale of its cosmetics line of business for $1,000,000. The cosmetics business segment qualifies as a component of the entity according to GAAP. The book value of those assets equals $800,000. The component generated operating loss of $600,000 for the year. The income tax rate is 25%. In its income statement for the year ended December 31, 2021, for what amount would the company report income (loss) from operations of a discontinued component?
a.Income from discontinued operations $150,000.
b.Loss from discontinued operations $(200,000).
c.Loss from discontinued operations $(300,000).
d.Loss from discontinued operations $(400,000).
Income/ loss from operations of a discontinued component:
Particulars | Amount |
Income from disposal of cosmetic line of business ( 1000000-800000) | 200000 |
Operating losses from discontinued component | (600000) |
Net income/(loss) | (400000) |
Tax benefit from discontinued cosmetic line (400000*25/100) | 100000 |
Net income/(loss) from discontinued operation | (300000) |
C. Loss from discontinued operations $(300000)
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