CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Operating income from discontinued operations and any gains or losses from their sale are ______

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 13

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
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