When a company disposes of a discontinued operation (segment), the transaction should be included in the income statement as a gain or loss on disposal, and reported as
A) a prior period adjustment.
B) other comprehensive income.
C) an amount after continuing operations.
D) a bulk sale of plant assets included in income from continuing operations.

Question

Quizplus · Accepted Answer

The gain or loss on disposal of a discontinued operation should be reported as an amount after continuing operations in the income statement. This is because the transaction relates to a segment that the company has already decided to dispose of and is not part of its ongoing operations. It should not be reported as a prior period adjustment or included in other comprehensive income, as these are not the appropriate categories for this type of transaction. Additionally, it should not be reported as a bulk sale of plant assets included in income from continuing operations, as this would not accurately reflect the nature of the transaction.

When a Company Disposes of a Discontinued Operation (Segment), the Transaction