Question & Answer: During July 2012 Ralston Company decides to dispose of one of its subsidiaries which…..

During July 2012 Ralston Company decides to dispose of one of its subsidiaries which qualifies for accounting as a discontinued operation. At the July 2012 measurement date Ralston Company estimates that it will report net income of $200,000 dollars from the measurement date until the disposal date which is expected to be in April 2013. In addition, Ralston estimates that it will lose $300,000 on the sale of the segment. How much gain or loss on discontinued operations will Ralston report in its 2012 income statement (net of income taxes)?

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Gain or (loss) on discontinued operations = 200000-300000= -100000
Loss if $100000 is to be reported on discontinued operations

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