Question

how do you disclose the information regarding the discontinued operations if you need to prepare an income statement. what is the codification?

Answer 1

Discontinued operation are reported on the income statement seperately from continuing operations. When company merge , understanding which assets are being divested can give a clear picture of how a company will make money in future.

Discontinued operation are the result of operations of a component of an entity that is either being held for sale or which has already been disposed of. The disposal transaction will result in the operation and cash flows of the compenent being eliminated from company operations continuing involvement.

When operations are discontinued , a company has multiple line items to report on its financial statements, The total gain or loss from the discontinued operations is thus reported, followed by relevant income taxes.

Moreover a company must provide a clear definition of the operation that is dicontinued, also the management must clearly indicate that the discontinued operation is no longer part of the core operations.

Sample

Particulars	Amount
Income from continuing operation before tax	xxxxxxx
Less: Income Taxes	xxxxx
Income From continuing operation	xxxxxxx
Profit/Loss from operation of dicontinued business	xxx/(xxx)
Income Tax Benefit	xxxxxx
Loss on discontinued operation	(xxxx)
Net Income	xxxxxx