- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 2. Analyzing Income Statements
- Subject 4. Non-Recurring Items
CFA Practice Question
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
Correct Answer: C
A company reports the operating results of a discontinued segment of its business under discontinued operations. The company also shows any gain or loss on the disposal of the discontinued segment separately under 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 |