Which of the Following Statements Apply to Discontinued Operations

question 59

Multiple Choice

Which of the following statements apply to discontinued operations?
1) The operations and cash flows have been (or will be) eliminated from the ongoing operations of the company as a result of the disposal transaction.
2) The company must report the profit (loss) and gain (loss) on discontinued operations net of the applicable taxes.
3) Assets (net of any related liabilities) that are held for sale as discontinued operations are valued and reported on the balance sheet at the lower of their carrying amount and fair value (less any anticipated costs of selling) .

• A) 1 and 2
• B) 1 and 3
• C) 2 and 3
• D) 1, 2 and 3

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Definitions:

Inflation Premium

The portion of a nominal interest rate that represents compensation for expected future inflation.

Interest Rate Risk

The risk that changes in interest rates will adversely affect the value of an investment, particularly relevant for fixed-income securities.

Bond Prices

The amount of money at which a bond is trading, which fluctuates based on interest rates, credit quality, and other factors.

Market Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can invest their funds in the financial markets.