Sierra Inc A)Choice 1
B)Choice 2
C)Choice 3
D)Choice 4

question 49

Multiple Choice

Sierra Inc.committed to sell its mountaineering division for $700,000 on October 1,Year 1.The book value of the division's net assets was $800,000.The disposal date is expected to be April 1,Year 2.Year 1 income of the division to October 1,Year 1 was a $30,000 loss,and income for the remainder of the year was a $10,000 loss.Sierra estimates that the division will lose another $25,000 during the remainder of the phase-out period in Year 2.Ignoring taxes choose the correct reporting for discontinued operations in the income statement of Sierra,Inc.,for the year ended December 31,Year 1. $$\begin{array} { | l | l | l | } \hline & \text { Income (loss) from } & \text { Gain (loss) from disposal } \\\hline & \text { Discontinued operations } & \text { of discontinued operations } \\\hline 1 & \$ 0 & ( \$ 165,000 ) \\\hline 2 & ( \$ 165,000 ) & \$ 0 \\\hline 3 & ( \$ 30,000 ) & ( \$ 135,000 ) \\\hline 4 & ( \$ 65,000 ) & ( \$ 100,000 ) \\\hline\end{array}$$

• A)Choice 1
• B)Choice 2
• C)Choice 3
• D)Choice 4

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