A loss due to a discontinued operation should be reported in the income statement
A) above income from continuing operations.
B) without related tax affect.
C) below income from continuing operations.
D) as an operating expense.

Question

Quizplus · Accepted Answer

A loss due to a discontinued operation should be reported below income from continuing operations in the income statement according to generally accepted accounting principles (GAAP). This separate reporting allows for a clearer understanding of the financial performance of the company going forward, without the impact of the discontinued operation. The loss should also be presented with the related tax effect, as it is a significant nonrecurring item that impacts the overall tax liabilities of the company. Additionally, it is not considered an operating expense, as it is not a cost related to the day-to-day operations of the company but rather a result of a strategic decision to discontinue a specific line of business.

A Loss Due to a Discontinued Operation Should Be Reported