In Reporting for Discontinued Operations, Typically the Date on Which

question 129

Essay

In reporting for discontinued operations, typically the date on which the disposal of the segment occurs follows the date the decision is made to dispose of the segment. In addition, the disposal may occur in the period (year 2) following the year the decision is made (year 1).
Under these circumstances, there are three situations, which can give rise to a reported overall gain on discontinued operations. The situations depend on earnings during the phase-out period (in both years), and on the difference between the selling price and book value of segment net assets.
Required: For each of the three situations, discuss: (1) the variables defining each situation, (2) the reporting of the gain in year 1, and (3) the rationale for that reporting.

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Definitions:

Primary Immune Response

The response of the immune system to first exposure to an antigen. Compare with secondary immune response.

Passive Immunity

Immunity acquired by the transfer of antibodies from another individual, as opposed to the body producing its own.

Artificially Induced

This describes a condition or reaction that is not naturally occurring but is created through human intervention or manipulation.

Naturally Induced

describes processes or responses initiated by natural factors or stimuli without human intervention.