Discontinued Ops and Unusual Items

Question 1

Disposal of a component of a business is a discontinued operation only if it represents a “_____ _____” that will have a major impact on the entity’s operating results.

Answer 1

Strategic shift

Question 2

Disposal of a major geographic area, line of business. or an equity method investment are considered discontinued ops. TF

Answer 2

True

Question 3

EPS is not calculated on DO

Answer 3

False

Question 4

All prior periods presented associated with a DO are adjusted. TF

Answer 4

True

Question 5

Major classes of assets and liabilities included as a part of DO are to be classified as “held for trading”. TF

Answer 5

False, held for sale

Question 6

Estimated disposal gains are recognized. TF

Answer 6

False, only actual

Question 7

Operating income or loss in period of decision + loss =

Answer 7

Discontinued Ops

Question 8

Troubled debt restructuring is not considered an extraordinary item. TF

Answer 8

True

Question 9

Write offs, write downs, gains and losses are not considered “extraordinary” for what types of items?

Answer 9

Accruals on LT contracts, disposals, effects of strikes, leased equipment, anything to do with foreign currency, Inventories, receivables, and sale of property