On December 2, 20X1, Flint Corp.'s board of directors voted to discontinue operations of its frozen food division and to sell the division's assets…

Choice "c" is correct. The $60,000 gain from discontinued operations would be reported in Flint's

20X2 income statement. The operating loss for January would offset the gain from disposal in

February, and the net amount would be reported as a gain (in this case) from discontinued

operations.

The operating losses for December would have been reported in Flint's 20X1 income statement.

Choice "a" is incorrect per the above. It would be correct if all of the gains and losses were included

in 20X1 instead of 20X2. However, gains and losses from discontinued operations are included in the

year they occur.

Choice "b" is incorrect. It includes the operating loss for December, 20X1 in with the 20X2 amounts.

Choice "d" is incorrect. It ignores the January operating loss. Operating losses are included in

gain/loss from discontinued operations, along with impairment losses and gains/losses on disposal.