When a Company Makes a Second Quarter Decision to Discontinue

question 32

Multiple Choice

When a company makes a second quarter decision to discontinue a segment, the first quarter tax expense:

• A) Results are not restated.
• B) is split between the tax expense calculated on restated quarter one income from continuing operations and the discontinued segment by subtracting the tax expenses calculated on the restated first quarter income from the original tax expense calculated for the first quarter, before the decision was made.
• C) is used to determine the incremental tax effect.
• D) is used to calculate the effective tax rate for the discontinued segment.

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Definitions:

Magnuson-Moss Warranty Act

A federal law in the United States that governs warranties on consumer products, aiming to protect consumers from deceptive warranty practices.

Statute Of Repose

A legal provision that limits the time within which an action can be brought, but unlike statutes of limitations, it is not tied to the discovery of harm but rather to the occurrence of a specific event, typically related to the completion of some act or process.

Consequential Damages

Damages that do not directly flow from an act but result as a secondary consequence, often relating to lost profits or revenue.

Public Policy

A system of laws, regulatory measures, courses of action, and funding priorities concerning a given topic promulgated by a governmental entity or its representatives.