- 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
Operating income from discontinued operations and any gains or losses from their sale are ______
B. segregated in the income statement.
C. reported after extraordinary items on the income statement.
A. not segregated in the income statement.
B. segregated in the income statement.
C. reported after extraordinary items on the income statement.
Correct Answer: B
Operating income from discontinued operations and any gains or losses from their sale are segregated in the income statement.
User Contributed Comments 14
| User | Comment |
|---|---|
| katybo | why not C.? |
| RichWang | It is reported BEFORE extraordinary items. |
| Rotigga | No RichWang, Unusual or Infrequent Items comes before Extraordinary Items. katybo is right; Discontinued Operations is after Extraordinary Itmes. |
| nike | C is wrong. Gains and losses from sale are unusual or infrequent items, and reported before extraordinary items. The first half of the sentence (Operating income from discontinued operations) is after extraordinary items. |
| epizi | B, is a more general way of putting the treatment of discontinued op.... and it is free from any doubt |
| bobert | If I recall correctly, there is no real format for the income statement. Therefore, the order is not applicable. It has to be segregated for sure however to get an accurate view of income from continuing ops. It is not just regular income from discontinued operations which is recorded after-tax when it is all sold and done. If you are still generating OPERATING income from the source you included it, but segregated. |
| bobert | NOTE: I am wrong about that order thing, but B still stands for my above reason, if that makes sense. The order is that IDEA thing, as someones posts later on in Q12. |
| rfvo | Bobert got it right. |
| warrentend1 | Operating Income from discontinued operations is recorded "below the line" . Gains or losses from their sale are Unusual or Infrequent items which are recorded "above the line". Therefore B is correct. |
| ambar | Please see question 11: here is the order: discontinued operations, extraordinary items, accounting changes |
| meghanchloe | I like that IDEA tip on how to remember it |
| gill15 | Thats awesome...I was using "U DUCk"....seriously....Unusual or Infrequent, Discon, Extraordinary, Changes in AP and then a silent k.... |
| johntan1979 | Uxtraordinary... real clever |
| Freda829 | gill that's amazing |