Which of the following most likely would be considered a discontinued operation?
A)Production or marketing functions are shifted from one location to another.
B)A sporting goods manufacturer has a bicycle division that meets FASB's definition of a component of the entity and decides to outsource the manufacture of its bicycles.
C)The unprofitable brands of a beauty products component of an entity that manufactures and sells consumer products are discontinued.
D)An entity that is a franchiser in the quick-service restaurant business also operates company-owned restaurants that are unprofitable in a certain region and, as a result, the entity decides to exit both the quick-service business as well as the company-owned restaurants in that region.
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

Discontinued operations are a component of an entity that either has been disposed of or is classified as held for sale, and represents a separate major line of business or geographical area of operations. Choice D describes a scenario where the entity decides to exit both a major line of business (quick-service restaurant business) and a geographical area (company-owned restaurants in a certain region), which aligns with the definition of a discontinued operation.

Which of the Following Most Likely Would Be Considered a Discontinued