4.

Roco Company manufactures both industrial and consumer electronics. Due to a change in its strategic focus, the company decided to exit the consumer electronics business, and in 2016 sold the division to Sunny Corporation. The consumer electronics division qualifies as a component of the entity according to GAAP. How should Roco report the sale in its 2016 income statement?

a.)

Include in income from continuing operations as a nonoperating gain or loss.

b.)

As an extraordinary item.

c.)

As a discontinued operation, reported below income from continuing operations.

d.) None of the above.

5.

Bridge Companys results for the year ended December 31, 2016, include the following material items:

Sales revenue		$5,000,000
Cost of goods sold		3,000,000
Administrative expenses		1,000,000
Gain on sale of equipment		200,000
Loss on discontinued operations		400,000
Understatement of depreciation expense in 2015 caused by mathematical error		250,000

Bridge Companys income from continuing operations before income taxes for 2016 is: a.) $700,000 c.) $950,000 d.) $1,000,000 e.) $1,200,000

6. in Baer Food Co.s 2016 single-step income statement, the section titled Revenues consisted of the following:

Net sales revenue	$	187,000
Income on discontinued operations, including gain on disposal of $21,000, and tax expense of $6,000		13,500
Interest revenue		10,200
Gain on sale of equipment		4,700
Total revenues	$	215,400

In the revenues section of the 2016 income statement, Baer Food should have reported total revenues of

$201,900

b. $203,700

c. $215,400

d. $216,300