What is Discontinued operation?
In short
A discontinued operation is a component of an entity that has been disposed of, or is held for sale, and whose disposal is a strategic shift with a major effect on operations and financial results, such as a major line of business or geographic area.
Key takeaways
- Its results are reported separately, net of tax, below income from continuing operations.
- Prior periods presented are recast to show the operation as discontinued.
- Selling a single asset or a minor product line is generally not a discontinued operation.
Where it's tested
FAR: Balance Sheet & Income Statement Preparation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A company disposes of a product line that represented 40% of revenue and a distinct major line of business. How should the results be presented?