51.0k views
2 votes
How is the disposal of a segment of the business reported?

User Amitwdh
by
8.1k points

1 Answer

4 votes

Final answer:

The disposal of a business segment is reported in the financial statements separately as discontinued operations, including any gain or loss on the transaction, with assets and liabilities classified as held for sale if applicable, according to GAAP or IFRS standards.

Step-by-step explanation:

The disposal of a segment of a business is usually reported in the financial statements according to the relevant accounting standards, such as the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). When a business disposes of a segment, it may be classified as discontinued operations if it represents a strategic shift that has a major effect on the company's operations and financial results. The results of the discontinued operations, which include any gain or loss from the disposal, must be presented separately from continuing operations in the income statement. Moreover, if applicable, the segment's assets and liabilities must be classified as held for sale in the balance sheet, and additional disclosures may be required to provide information on the disposal.

  • The income statement should reflect the results of the discontinued operations separately.
  • Any gain or loss from the disposal must be recorded.
  • Assets and liabilities of the segment should be classified as held for sale, if applicable.
  • Additional disclosures may be needed to provide insight into the transaction.
User Victor Choy
by
8.3k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.