Which of the following is most likely to be classified as discontinued operations?
Multiple Choice
Sale of a small equity method investment in another company.
Sale of a group of assets that represents a strategic shift in operations.
Sale of undeveloped land due to lack of customer demand for additional store locations.
All of the other answers would be classified as discontinued operations.
Solution:
Sale of a group assets that represents a strategic shift in operations.
Explanation:
Discontinued operations means parts of a company's core business or product line that have been divested or shut down that are reported seperately from continuing operations on the Income statement. A disposal of a component shall be reported in discontinued operations. If the disposal represents a strategic shift that has a major effect on an entity's operations and financial results like some occurs such as classified as held for sale, disposed of by sale, disposed of other than by sale. The sale of a group of assets that represents a strategic shift in operations.
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