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:

Unit Sales Price

The amount charged to customers for a single unit of a product or service.

Fixed Costs

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the amount of production or business operations.

Cost Estimation Methods

Techniques used to predict the expenses likely to be incurred in the manufacturing of a product or the execution of a project.