When the Disposal of a Significant Segment Occurs, the Income

question 236

True/False

When the disposal of a significant segment occurs, the income statement should report both income from continuing operations and income (loss) from discontinued operations.

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Definitions:

Maximum Earning

The highest possible income or profit that an entity or individual can achieve under given conditions.

Contestable Market

A market in which the costs of entry and exit are low, so a firm risks little by entering. Efficient production and zero economic profits should prevail in a contestable market.

Economic Profits

Profits earned by a firm after accounting for both its explicit and implicit costs, including opportunity costs.

Property Rights

The legal rights to use, control, and derive benefits from a resource, good, or property.