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Basic Question 0 of 11
When a company sells a major portion of its business, it reports the operating results of the discontinued portion of the business on the income statement under ______.
B. cumulative effect of a change in accounting principle
C. discontinued operations
A. extraordinary items
B. cumulative effect of a change in accounting principle
C. discontinued operations
User Contributed Comments 5
| User | Comment |
|---|---|
| katybo | if the portion is independent, right? |
| sarath | If the portion is separate both physically and operationally then it will be considered discounted operations and it will be reported under the discounted operations.... |
| Rotigga | The key is that if a firm divests a Portion of a segment, then it is an Unusual or Infrequent Item, but if sheds a complete segment, then it goes under Discontinued Operations. |
| ridone | to my understanding if the word "major" were removed from the question the correct answer would be B? |
| ddrmax | @ridone. if 'major' is removed, it will be reported as a usual/infrequent item |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe the financial reporting treatment and analysis of non-recurring items (including discontinued operations, unusual or infrequent items) and changes in accounting standards;
contrast operating and non-operating components of the income statement;
CFA® 2024 Level I Curriculum, Volume 3, Module 18.