Where Do Discontinued Operations Go on the Income Statement?

Definition of Discontinued Operations

Discontinued operations are those that have been or will be closed or disposed of by an entity. They are considered discontinued if the entity has made a decision to cease operations and has taken steps to do so, such as selling or closing the operation, or if the operation has been sold or closed. Discontinued operations are reported separately on the income statement from continuing operations.

Reporting Discontinued Operations

Discontinued operations are reported on the income statement in a separate section below continuing operations. The following information is typically included in this section:

• A description of the discontinued operation
• The gain or loss on the disposal of the discontinued operation
• The income or loss from discontinued operations
• The net income or loss from discontinued operations

Impact on the Financial Statements

The disposal of a discontinued operation can have a significant impact on the financial statements of an entity. The gain or loss on the disposal of the discontinued operation is reported as an extraordinary item on the income statement. This gain or loss can have a material impact on the entity’s net income for the period.

The income or loss from discontinued operations is reported separately from continuing operations. This allows users of the financial statements to see the performance of the discontinued operation apart from the rest of the entity’s operations.

Conclusion

Discontinued operations are reported separately on the income statement from continuing operations. This allows users of the financial statements to see the performance of the discontinued operation apart from the rest of the entity’s operations. The disposal of a discontinued operation can have a significant impact on the financial statements of an entity, and the gain or loss on the disposal of the discontinued operation is reported as an extraordinary item on the income statement.

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