As Part of Their Normal Course of Business, Companies Sometimes

question 152

Essay

As part of their normal course of business, companies sometimes sell off entire divisions or segments. The accounting treatment for such sales is composed of two components and a reporting format.

Required:

a. Describe the accounting treatment and reporting format used for such sales.
b. Discuss why such sales are separated from other parts of the income statement.

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Definitions:

Quotas

Limits set by governments on the amount of a specific good that can be imported or exported within a certain timeframe.

Tariffs

Taxes imposed by a government on goods and services imported from other countries, often to protect domestic industries or to generate revenue.

Restrict Imports

This is the imposition of government regulations or tariffs to limit the number and value of foreign goods entering a country.

General Agreement

A broadly accepted understanding or accord among parties on a particular issue or set of issues.