On May 1, Foxtrot Co. agreed to sell the assets of its Howard Division. The following additional facts pertain to the transaction:

• The Howard Division qualifies as a component of the entity according to GAAP regarding discontinued operations.
• Howard's operating income was a pre-tax loss of $20,000 in 2021.
• The book value of Howard's assets totaled $96,000 on December 31, 2021.
• Foxtrot's income tax rate is 25%.

Suppose that the Howard Division's assets had not been sold by December 31, 2021, but were considered held for sale. Assume that the fair value of these assets was $80,000 at December 31, 2021. In the income statement for the year ended December 31, 2021, Foxtrot Co. would report discontinued operations of:

Multiple Choice

• $15,000 loss.

• $27,000 loss.

• $12,000 loss.

• $36,000 loss.