Which of the following statements regarding discontinued operations is true?
A)The assets and liabilities of a disposal group classified as held for sale by an entity may be offset and shown as a single item on the balance sheet of the entity.
B)The assets and liabilities of a disposal group of an entity must be shown separately in the asset and liabilities sections of the balance sheet of the entity and cannot be offset.
C)An adjustment in a subsequent period to the selling price of a component of an entity sold must be reported as a retroactive adjustment in the prior-period financial statements of the entity in which the discontinued operation was reported.
D)The gain or loss on disposal of a component of an entity classified as a discontinued operation need not be disclosed separately from the loss from operations of the discontinued segment.
E)None of these answers is correct.

Question

Quizplus · Accepted Answer

According to GAAP, the assets and liabilities of a disposal group must be shown separately in the asset and liabilities sections of the balance sheet of the entity and cannot be offset. This is because the disposal group represents a distinct strategic business unit, and the offsetting of assets and liabilities could potentially hide important information from users of the financial statements.

Which of the Following Statements Regarding Discontinued Operations Is True