Nelly Company Sold Its Cattle Ranching Component on June 30

question 121

Multiple Choice

Nelly Company sold its cattle ranching component on June 30, 2016, for a gain of $1,000,000. From January through June, the component had sustained operating income of $300,000. The income tax rate is 35%. How should Nelly report the income and the sale on its income statement?

• A) as $300,000 operating income and a $1,000,000 gain on sale of component
• B) as a $1,300,000 gain in operating income
• C) as a net of tax gain of $845,000 after income from continuing operations
• D) as $195,000 operating income and a $650,000 gain on sale of the component

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Definitions:

Demand Uncertainty

The unpredictability of consumer demand for a product or service, making planning and forecasting challenging.

Exchange Rates

The value of one currency for the purpose of conversion to another.

Simulation Methods

Techniques used to imitate the operation of real-world processes or systems over time to study their behavior and performance.

Evaluating Decisions

The process of analyzing and reviewing choices to determine their effectiveness and impacts before or after they are made.