Regarding discontinued operations,which of the following statements is correct?
A) Gains and losses on the sale of plant assets are reported as discontinued operations.
B) A loss on discontinued operations is reported with an addition for the applicable income tax.
C) A loss on discontinued operations is included with an addition for the income tax savings on the loss.
D) The disposal of the financing segment of a large corporation would be reported as a discontinued operation.

Question

Quizplus · Accepted Answer

According to GAAP, discontinued operations are defined as a component of a company that has been sold, disposed of, or abandoned, and is significant enough to be reported separately on the income statement. The disposal of a segment, such as a financing segment, qualifies as a discontinued operation. Gains and losses on the sale of plant assets are not reported as discontinued operations. A loss on discontinued operations is reported net of applicable income tax, not with an addition for income tax savings.

Regarding Discontinued Operations,which of the Following Statements Is Correct