What are discontinued Operations?

Expert Solution

Discontinued operations are those divisions of operations of an entity which is held for sale or has already been disposed off. Revenue from these types of transactions are separately shown in the statement of profit or loss account as they are considered to be a part of extraordinary items. Revenue from these kind of transactions occur only a few times in the entire life of the business. Generally revenue from these discontinued operations will be a lump sum huge amount in case of disposal and a negligible amount in case of the division kept for disposal.

For example entity A had two separate businesses i.e A1 dealing with infrastructure and A2 dealing with apparels. If the company decided to dispose off it's apparel division and keeps it for sale. Then the revenue from A1 will be considered as before but A2 revenue will be disclosed under a separate head in the statement of profit and loss account. Here business division A2 is considered as discontinued operation.

ekkarill92 answered 2 hours ago

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