Identify and Briefly Discuss Four Disadvantages of a Vertical Integration

question 114

Essay

Identify and briefly discuss four disadvantages of a vertical integration system.

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Definitions:

Extraordinary Gain

Unusual and infrequent gains that are outside the normal operations of a business, such as profits from selling a piece of land at a significantly higher price than its book value.

Component-Disposition Gains

Profits realized from the disposal of a component or part of an asset, often a segment of a larger asset that is sold separately.

Discontinued Operations

Components of a business that have been disposed of or are held for sale and are not part of the company’s future operations.

Extraordinary Items

Unusual and infrequent gains or losses that are reported separately on the income statement to provide a clearer picture of a company's ongoing operational performance.