When an Entity Reports on a Sale of a Component

question 112

Multiple Choice

When an entity reports on a sale of a component of the business

• A) any income or loss from operations of the component should be reported in the income from continuing operations section, but any gain or loss on the sale of the component should be presented below the income from continuing operations section.
• B) current operating income or loss of the component and any gain or loss on sale of the component should be presented in a separate section of the income statement.
• C) any gain or loss on the sale should always be presented as a component of other comprehensive income.
• D) all information related to the sold component should be reported solely in the footnotes accompanying the financial statements.

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Definitions:

Equivocality

The characteristic of possibly being understood in multiple ways; vagueness.

Karl Weick

A prominent organizational theorist known for his work on sensemaking in organizations, which explores how people construct meaning from their experiences.

Mechanical Principles

The basic laws and concepts of physics that apply to mechanical systems, including motion, forces, energy, and the properties of materials.

Nonsummativity

The principle that the whole is greater than the sum of its parts, often cited in contexts like teamwork and organizational behavior.