Asked by Alejandro Bernal on Apr 25, 2024
Verified
In reporting discontinued operations the income statement should show in a special section
1) gains on the disposal of a discontinued component.
2) losses on the disposal of a discontinued component.
A) 1 only.
B) 2 only.
C) neither 1 nor 2.
D) both 1 and 2.
Discontinued Operations
Parts of a company's operations that have been disposed of or sold off, which are reported separately on the financial statements.
Gains
Financial benefits realized from selling assets for more than their purchase costs.
Losses
Reductions in asset value not related to the normal operations of the business.
- Recognize and elaborate on the parts and value of discontinued operations in the context of financial reports.
Verified Answer
CN
callie Newman6 days ago
Final Answer :
D
Explanation :
The income statement should include both gains and losses on the disposal of a discontinued component in a special section to fully reflect the impact of the discontinued operations on the financial performance of the company. This is in accordance with the accounting rules and principles set forth by the Financial Accounting Standards Board (FASB).
Learning Objectives
- Recognize and elaborate on the parts and value of discontinued operations in the context of financial reports.