The Gain or Loss on the Disposal of a Business

question 16

Multiple Choice

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

• A)an extraordinary item.
• B)part of discontinued operations
• C)part of income from operations.
• D)other gains or losses.

Understand the principles behind the valuation of annuities and perpetuities.

Calculate the present value of annuities, both ordinary and growing, using different rates of return.

Understand the concept of financial saving goals and how to calculate future value towards achieving those goals.

Apply the concept of the time value of money to various financial planning and investment situations.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset, where the asset's cost is evenly spread over its useful life.

Yearly Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear, and tear over time.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument back to their present value, thus helping to determine the potential value of an investment.

Straight-Line Depreciation

A method of allocating an asset's cost evenly throughout its useful life.