Final answer:
The statement is true. Material gains or losses from the disposal of a business component are reported under Discontinued Operations, which is true as per accounting standards. This reflects businesses' responses to sustained losses by divesting non-performing segments.
Step-by-step explanation:
The statement is true. Material gains or losses that arise from the disposal of a component of a business are indeed reported under Discontinued Operations, according to accounting standards. These figures are separate from regular operations as they represent parts of the business that will no longer continue into the future.
When losses are encountered, businesses may decide to exit or shut down these non-performing segments as a strategic move to eliminate ongoing losses and streamline their operations.
This is especially relevant in cases where the losses are sustained over a long period, indicating that the operations are not covering their variable costs and are not sustainable in the long run. The decision to exit is a significant business move aimed at responding to these sustained patterns of losses.