Which of the following statements apply to discontinued operations?
1) The operations and cash flows have been (or will be) eliminated from the ongoing operations of the company as a result of the disposal transaction.
2) The company must report the profit (loss) and gain (loss) on discontinued operations net of the applicable taxes.
3) Assets (net of any related liabilities) that are held for sale as discontinued operations are valued and reported on the balance sheet at the lower of their carrying amount and fair value (less any anticipated costs of selling).
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3

Question

Quizplus · Accepted Answer

All three statements correctly describe the accounting treatment for discontinued operations. Statement 1 outlines the criteria for classification as discontinued operations, statement 2 specifies the reporting requirement for profits or losses from discontinued operations, and statement 3 describes the valuation method for assets held for sale.

Which of the Following Statements Apply to Discontinued Operations