The US $50,000 compensating balance requirement is partially satisfied by the entity's practice of maintaining a US $25,000 balance for transaction purposes. Thus, only US $25,000 of the loan will not be available for current use, leaving US $225,000 of the loan usable. At 6% interest, the US $250,000 loan would require an interest payment of US $15,000 per year. This is partially offset by the 2% interest earned on the US $25,000 incremental balance, or US $500. Subtracting the US $500 interest earned from the US $15,000 of expense results in net interest expense of US $14,500 for the use of US $225.000 in funds. Dividing US $14,500 by US $225,000 produces an effective interest rate of 6.44%.

A discontinued operation DO is a component of an entity that has been disposed of or meets the criteria for classification as held for sale. It is1) a separate major line of business or geographical operating area,2) part of a single plan to dispose of such a line or area. or3) a subsidiary acquired solely for resale. A component of an entity consists of operations and cash flows that are clearly distinguishable from the rest of the entity for financial reporting as well as operationally. A single amount is disclosed on the face of the income statement equal to the sum of1) after-tax profit loss on DOs and2 after-tax gain loss on a remeasurement of noncurrent assets or disposal groups) classified as held for sale at fair value minus cost to sell orb) disposal of the assets or disposal groups that constituted the DO.