Part A:In each of the following circumstances, determine whether the disposal situations would qualify as a discontinued operation.Give citations from the ASC to justify your answer.

1.An entity manufactures and sells consumer products that are grouped into five major product lines. Each product line includes several individual products. The product line comprises the lowest level where operations and cash flows can be clearly distinguished from the rest of the entity.Product line 1 is made up of almost 100 different individual products.Due to declining sales, 3 products in Product line 1 were discontinued during the year.

2.An entity manufactures and sells consumer products that are grouped into five major product lines. Each product line includes several individual products. The product line comprises the lowest level where operations and cash flows can be clearly distinguished from the rest of the entity.Product line 3 which makes up between 20 & 25% of the entity's total revenues has experienced significant market declines while the other product lines have been growing.As a result, the entity has decided, at the end of its current fiscal year, to sell its operations associated with Product line 3. Product line 3's operations can be sold as soon as an acceptable offer is received. The entity expects to complete the sale of Product line 3 within a matter of months.

3.An entity operates restaurants in several states. For that entity, each restaurant comprises operations and cash flows that can be clearly distinguished from the rest of the entity.As a result of an above market offer for two of its restaurants in the state of Alabama, the entity sold these restaurants.These two restaurants produced approximately 1.5% of the entity's total revenues and comprised about 1% of the entity's total assets.

Part B. ABC Co. decided on March 3, 2020 to dispose of their Widget Segment.The sale of the segment was completed on November 13, 2020.The disposal of this segment qualifies as a discontinued operation.Income Statement data for ABC for calendar years 2018-2020 are as follows:

202020192018

Sales$3,000,000$2,700,000$2,500,000

Cost of goods sold1,800,0001,593,0001,525,000

Operating expenses700,000680,000650,000

These amounts include the operating results for the Widget Segment through its disposal on November 13, 2020.Income Statement data for the Widget Segment separately for 2018-2020 are as follows:

202020192018

Sales$450,000$600,000$700,000

Cost of goods sold 315,000408,000455,000

Operating expenses120,000150,000130,000

The book value of the assets and liabilities of Widget on November 13, 2020 was 4,800,000.The sales price was 6,210,000.ABC has a tax rate of 21% for all years and had 150,000 shares of common stock outstanding for all years.

Required:Prepare, in good form, complete comparative Income Statements for ABC for the years 2018-2020.