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

question 53

Multiple Choice

If capital 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 the effect if this sale 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 retroactive correction of prior years' error, net of applicable taxes, $570,000.
• D)an extraordinary item net of applicable taxes, $570,000.

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Definitions:

Performance Orientation

A learning orientation characterized by a focus on presenting oneself well and appearing intelligent to others.

Prudence

The quality of being careful, thoughtful, or wise in practical affairs or decision-making.

Fear of Failure

The persistent anxiety or aversion to the possibility of failing, which can inhibit one's willingness to take risks or attempt certain tasks.

Desire for Success

The motivation or drive to achieve goals and excel in tasks.