A Company Closes a Facility and Moves to a New

question 34

Multiple Choice

A company closes a facility and moves to a new location.How would a loss on the disposal of the equipment at the closed facility be reported on an income statement?

• A)As a component of discontinued operations
• B)As an extraordinary loss
• C)As a contra revenue from continuing operations
• D)As an operating expense in net profit from continuing operations

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Definitions:

Statute of Frauds

A legal concept that requires certain types of contracts to be in writing and signed by the party to be charged, in order to be legally enforceable.

Collateral Promise

A collateral promise is a secondary agreement that one party will assume responsibility for another's debt or obligation if that other party fails to fulfill it.

Secondary Obligations

Duties or liabilities that arise not from the primary contract but as a result of ancillary or supplementary agreements or circumstances.

Statute of Frauds

A legal concept that requires certain types of contracts to be in writing and signed by all parties involved to be enforceable.