If a company writes down the net assets of a discontinued operation from original carrying value to a remeasurement of fair value in one year,then in the next year the fair value changes ________.
A)the company will recognize any subsequent loss or gain for the difference between new fair value and prior year remeasured fair value
B)the company will recognize any subsequent loss but limited gains up to the original carrying value before remeasurement
C)the company will recognize any subsequent loss but no gains for the difference between new fair value and prior year remeasured fair value
D)the company cannot recognize any subsequent loss or gain

Question

Quizplus · Accepted Answer

The company can recognize subsequent losses but can only recognize gains up to the original carrying value before the remeasurement. This is in line with the accounting principle that prevents recognizing gains beyond the original carrying value of the asset.

If a Company Writes Down the Net Assets of a Discontinued