When a Segment of a Business Has Been Discontinued During

question 123

Multiple Choice

When a segment of a business has been discontinued during the year, the gain or loss on disposal should:

• A) include operating losses of the current period up to the measurement date.
• B) be net of applicable income taxes.
• C) be reported as an infrequent item.
• D) include operating losses during the phase-out period.

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Definitions:

Expected Value

The anticipated value for a given investment or decision in probability and statistics, calculated as the sum of all possible values each multiplied by the probability of occurrence.

Risk Trading

The act of exchanging financial instruments or commodities with a variable level of risk, often in the hope of gaining a higher return.

Adverse Selection

A situation in economics and insurance where parties with higher risk are more likely to engage in an agreement, leading to unbalanced and unfavorable outcomes for one of the parties.

Diversification

An investment strategy aimed at reducing risk by allocating investments among various financial instruments, industries, or other categories.