When a company discontinues and disposes of a component segment of its operations,the gain or loss from disposal should be reported as:
A)an adjustment to retained earnings.
B)a sale of fixed assets in "other" expense.
C)an extraordinary item.
D)an accounting change.
E)a special item after continuing operations and before extraordinary items.

Question

Quizplus · Accepted Answer

The gain or loss from disposal of a component segment of its operations should be reported as a special item after continuing operations and before extraordinary items. This is because it represents a significant event that is not expected to occur frequently and is separate from the company's normal business operations. It should be reported separately to provide transparency to investors and show the impact on the overall financial performance of the company.

When a Company Discontinues and Disposes of a Component Segment