Black and Decker decides to discontinue producing toasters in lieu of more versatile toaster ovens. In the process of discontinu

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Black and Decker decides to discontinue producing toasters in lieu of more versatile toaster ovens. In the process of discontinu

ing this line, the company disposes of the old production equipment and buys new equipment. The disposal of the old equipment would be reported in the income statement as:

Business

1 answer:

Nady [3.2K] · Answer 1 · 2026-04-06T21:45:40+03:00

Answer:

The appropriate response is gain or loss from the asset disposal during continuing operations.

Explanation:

When an item of property, plant, and equipment is sold and results in a gross profit, any related expenses incurred are also considered. Thus, the income statement reflects only the net profit from this sale.

In the income statement, just a single entry represents the net profit from the asset's sale. Although post-regulatory change outcomes are consistent with prior practices, the intent of limiting high gross income and expenses from being separately recorded is to maintain clarity in financial analysis performed at the year's end.