If Plant Assets of a Manufacturing Company Are Sold at a Gain

question 28

Multiple Choice

If plant assets of a manufacturing company are sold at a gain of $820,000 less related taxes of $250,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as

• A)a gain of $820,000 and an increase in income tax expense of $250,000.
• B)operating income net of applicable taxes, $570,000.
• C)a prior period adjustment net of applicable taxes, $570,000.
• D)an extraordinary item net of applicable taxes, $570,000.

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Definitions:

Full Employment

The condition in which all available labor resources are being used in the most economically efficient way, typically characterized by the absence of cyclical unemployment.

Policymakers

Individuals or groups responsible for making decisions on public policy in various areas like economy, education, and health.

Stabilize

To make or become stable or more stable; in economic terms, to reduce fluctuations in economic activity.

Federal Reserve Act

A U.S. legislation in 1913 that established the Federal Reserve System as the central banking system of the United States, designed to provide the country with a safer, more flexible, and more stable monetary and financial system.