Summary Business Accounting

Question:

How are discontinued operations reported in the income statement?



Answer:



The net-of-tax income effects of a discontinued operation must be disclosed separately in the income

statement, below income from continuing operations. The income effects include income (loss) from

operations and gain (loss) on disposal. The gain or loss on disposal must be disclosed either on the face

of the statement or in a disclosure note. If the component is held for sale but not sold by the end of the

reporting period, the income effects will include income (loss) from operations and an impairment loss if

the fair value less costs to sell is less than the book value of the component’s assets. The income (loss)

from operations of the component is reported separately in discontinued operations on prior income

statements presented for comparative purposes.