Which of the Following Is a Required Disclosure in the Income

question 3

Multiple Choice

Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business?

• A)The gain or loss on disposal should be reported as an extraordinary item.
• B)Results of operations of a discontinued component should be disclosed immediately below extraordinary items.
• C)Earnings per share from both continuing operations and net income should be disclosed on the face of the income statement.
• D)The gain or loss on disposal should not be segregated, but should be reported together with the results of continuing operations.

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Definitions:

Injunction

A judicial order that restrains a person from beginning or continuing an action that threatens or invades the legal right of another, or that compels a person to carry out a certain act, such as repairing an injury.

Court Order

An official proclamation issued by a judge that requires a person or entity to do or cease doing a specific action.

Property Rights

Legal rights to possess, use, and dispose of assets including tangible and intangible property.

Negative Externality

A cost that affects a third party who did not choose to incur that cost, often associated with pollution or public health issues.