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On the statement of profit or loss, where are gains and losses on the disposal of non-current assets reported?
AWithin operating expenses, immediately above the net income from operations line
BBelow the net income from operations line, as other revenue and expenses
CAs part of cost of sales in arriving at the gross profit figure
DOnly in the statement of financial position, never in profit or loss
Answer & Solution
Correct answer: B. Below the net income from operations line, as other revenue and expenses
1. Gains and losses on disposal arise outside normal operations.
2. To keep operating results clear, they are shown below the "net income from operations" line.
3. They appear under a heading such as "other revenue and expenses", with gains added and losses deducted.
4. They are not part of operating expenses or cost of sales, and they do appear in profit or loss, so D is wrong.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.8 "Gains and Losses on the Income Statement", p.172_
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