Eagan Company Has Three Product Lines, A, B and C

question 74

Multiple Choice

Eagan Company has three product lines, A, B and C. The following information is available:

-Eagan is thinking of dropping product line B since it is losing money. Assuming Eagan drops line B and does NOT replace it, the operating income will

• A) increase $ 2,000.
• B) decrease $ 4,000.
• C) decrease $10,500.
• D) not change.

---

Definitions:

IFRS

International Financial Reporting Standards, a set of global accounting standards for financial reporting.

U.S. GAAP

United States Generally Accepted Accounting Principles, which are a set of rules and standards for financial reporting.

Long-Lived Asset

Assets used in the operations of a business that are expected to provide economic benefits for a period longer than one year.

Net Book Value

The value of an asset after subtracting accumulated depreciation from its original cost, synonymous with carrying value but rephrased for clear understanding.