The Gain or Loss on the Disposal of a Business

question 36

Multiple Choice

The gain or loss on the disposal of a business segment is shown:

• A)on the balance sheet net of the income tax consequences.
• B)on the income statement net of the income tax consequences.
• C)as part of other comprehensive income.
• D)as part of extraordinary items.

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Definitions:

Direct Method

A technique in cost accounting where only direct costs are assigned to cost objects, ignoring indirect costs.

Step-Down Method

A cost allocation method used in accounting to assign overhead costs to products or service departments in a sequential manner.

Step-Down Method

A cost allocation method that sequentially allocates service department costs to other service departments and then to production departments.

Janitorial Department

A division within an organization dedicated to the maintenance and cleaning of buildings and facilities.