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3 October, 14:11

During 2020, Lopez Corporation disposed of Pine Division, a major component of its business. Lopez realized a gain of $3,000,000, net of taxes, on the sale of Pine's assets. Pine's operating losses, net of taxes, were $3,500,000 in 2020. How should these facts be reported in Lopez's income statement for 2020

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  1. 3 October, 15:57
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    The income statement of Lopez corporation was reported to have a loss of $500,000 and is further explained below.

    Explanation:

    Solution

    Given that:

    Lopez corporation realized a gain of = $3,000,000

    Pine's net taxes, operating losses in 2020 was = $3,500,000

    Now,

    The way it will be reported in Lopez income statement for 2020 is shown below:

    The Lopez's Income statement for 2020

    Total Amount to be included in

    Income from Continuing Operations Results of Discontinued Operations

    0 $500,000 loss

    Note: We subtract the operating loss and net taxes of Pine Division from Lopez cooperation gain, which is stated as follows

    $3,500,000 - $3,000,000 = $500,000
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Home » Business » During 2020, Lopez Corporation disposed of Pine Division, a major component of its business. Lopez realized a gain of $3,000,000, net of taxes, on the sale of Pine's assets. Pine's operating losses, net of taxes, were $3,500,000 in 2020.
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