When a Company Classifies a Component as Held for Sale

question 79

True/False

When a company classifies a component as held for sale, it must report the component on its balance sheet at the lower of its book value or its fair value minus costs to sell.

---

Definitions:

Dupont Analysis

A financial analysis framework that breaks down a company's return on equity into three component parts—profitability, asset efficiency, and financial leverage—to assess its financial performance.

Common-Size Balance Sheets

Financial statements that present all items in percentage terms of the total assets for easy comparison.

Total Assets

Total assets refer to the sum of all assets owned by a person or entity, reported on the balance sheet, which includes tangible and intangible items of value.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, often referred to as stockholders' equity or owners' equity.