When Tiffany & Co. discontinued Iridesse, a chain of stores dedicated to pearl-only jewelry, due to losses sustained since its founding, Tiffany & Co. recorded an expense equal to the amount of the cumulative operating losses.

Question

Quizplus · Accepted Answer

When a company discontinues a business segment, it does not record an expense equal to the cumulative operating losses. Instead, it may recognize a loss on disposal if the segment's assets are sold for less than their carrying amount.