On April 30, 2006, Raye Company, Which Has a Fiscal

Multiple Choice

On April 30, 2006, Raye Company, which has a fiscal year ending September 30, adopted a plan to discontinue the operations of Bello Division, an operating segment, on November 30, 2006. Bello had contributed a major portion of Raye's sales volume. Raye estimated that Bello would sustain a loss of $460,000 from May 1, 2006, through September 30, 2006, and would sustain an additional loss of $220,000 from October 1, 2006, to November 30, 2006. Raye also estimated that it would realize a gain of $600,000 on the disposal of Bello's net assets. On September 30, 2006, Raye determined that Bello had an operating loss of $1,120,000 for the year ended that date, of which $420,000 represented the loss from May 1 to September 30, 2006.
Disregarding income tax effects, the amount that Raye reports in its September 30, 2006, income statement as gain or loss on disposal of Bello is:

A) $40,000 loss
B) $80,000 loss
C) $180,000 gain
D) $600,000 gain
E) Some other gain or loss