When a Company Disposes of a Discontinued Operation (Segment), the Transaction

question 56

Multiple Choice

When a company disposes of a discontinued operation (segment) , the transaction should be included in the income statement as a gain or loss on disposal, and reported as

• A) a prior period adjustment.
• B) other comprehensive income.
• C) an amount after continuing operations.
• D) a bulk sale of plant assets included in income from continuing operations.

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Definitions:

Tax Rate

The rate at which a person or business is taxed by the state on their earnings or gains.

CCA Rate

Capital Cost Allowance rate, which is the rate at which a business can claim depreciation on certain property types for tax purposes in Canada.

Straight-Line Depreciation

A system for dividing the cost of a solid asset throughout its operational life in equal yearly portions.

Net Advantage to Leasing

A financial analysis metric that compares the costs of leasing to the costs of purchasing an asset, enabling businesses to determine the most cost-effective financing option.