Disposal of a Segment of a Business

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Question

Which of the following qualifies as a disposal of a segment of a business?

Answers

A. Perrier Inc., producer of bottled spring water and soft drinks, discontinues production of its bottled spring water. This operation is self-contained.

B. Superpharm Drugs, operator of chain of discount drug stores, reaches an agreement to sell its Boston location to a competitor.

C. Irving Inc. supplies its own service stations and independent operators from its refineries. The firm decides to discontinue marketing to independents.

D. None of these answers.

E. Treadrite, a shoe manufacturer, has decided to discontinue its line of work boots. The firm's operations are concentrated in single plant.

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Explanations

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A. B. C. D. E.

A segment is a component of an entity whose activities represent a separate major product line and activities can be physically and operationally distinguished from the remainder of the entity for financial reporting purposes. The discontinued spring water operation thus qualifies as disposal of a segment.

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