Patrick, Inc

question 28

Multiple Choice

Patrick, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division's assets with a book value of $1,260,000 are sold for $900,000. Operating income from January 1 to June 30 for the division amounted to $150,000. Ignoring income taxes, what total amount should be reported on Patrick's income statement for the current year under the caption, Discontinued Operations?

• A) $150,000
• B) $210,000 loss
• C) $360,000 loss
• D) $510,000

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Definitions:

WACC

Weighted Average Cost of Capital; a calculated average of the cost of equity and the cost of debt that a company uses to finance its operations, weighted based on the proportion of each finance source in the company's capital structure.

Capital Structure

Capital structure is the mixture of debt and equity that a company uses to finance its operations and growth.

Coupon Rate

The yearly percentage yield from a bond, measured against its nominal value.

Market Price

The current price at which a service or asset can be bought or sold in the market.