- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 21. Understanding Income Statements
- Subject 6. Non-Recurring Items and Non-Operating Items
CFA Practice Question
A company with a tax rate of 40% sold a capital asset with a net book value of $500,000 for $570,000 during the year. Which of the following amounts (in $) will most likely be reported on its income statement for the year related to the asset sale?
A. $42,000
B. $70,000
C. $570,000
Explanation: The disposition of a capital asset is reported as a net gain or loss ($570,000 - $500,000 = $70,000) on the income statement before tax effects.
User Contributed Comments 2
| User | Comment |
|---|---|
| Inaganti6 | Great question. I guess it appears in non-recurring ? |
| dbalakos | I would say discontinued although not certain, can someone confirm this? |