Which of the following is most likely to be classified as discontinued operations? A) Sale of a small equity method investment in another company. B) Sale of a group of assets that represents a strategic shift in operations. C) Sale of undeveloped land due to lack of customer demand for additional store locations. D) All of the other answers would be classified as discontinued operations.

Question

Jaslyn Hanson

Business

23 October, 10:34

Which of the following is most likely to be classified as discontinued operations? A) Sale of a small equity method investment in another company. B) Sale of a group of assets that represents a strategic shift in operations. C) Sale of undeveloped land due to lack of customer demand for additional store locations. D) All of the other answers would be classified as discontinued operations.

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Answers (1)

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Eric · Answer 1

Option B. Sale of a group of assets that represents a strategic shift in operations.

Explanation:

The reason is that the a group of assets represents a separate business unit whose revenue are mostly independent of the operations of the other business units of the company. Hence these operations or business units under the International Financial Reporting Standards relating to Non-current assets held for sale and discontinued operations, says that the held for sale non current assets that represent whole of the business unit or separate line of business of the company must be reported as discontinued operations in the financial statements.