Question

In the following circumstance, determine whether the disposal would qualify as a discontinued operation. The company is a calendar year company, and the transactions are occurring in 2018. Give citations from the ASC to justify your answer.

An entity operates restaurants in several states. For that entity, each restaurant comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. As a result of an above market offer for two of its restaurants in the state of Alabama, the entity sold these restaurants. These two restaurants produced between 1 & 3% of the entity’s total revenues and comprised about 1.5% of the entity’s total assets.

Answer 1