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F1 - M5 - Income Statement: Discontinued Operations
Terms in this set (10)
what conditions must be present for a disposal to be reported in discontinued operations?
a disposal of a component, group of components, business activity, or nonprofit activity is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on an entity's operations and financial results
The gain (loss) from discontinued operations can consist of
1. an impairment loss
2. a gain (loss) from actual operations
3. a gain (loss) on disposal
How do we account for subsequent increases in the fair value of a discontinued component?
a gain is recognized for the subsequent increase in fair value minus costs to sell (but not in excess of the previously recognized cumulative loss). the gain is reported in the period of increase.
all amounts are included in discounted operations in the
period in which they occur
are future estimated amounts reported on discontinued operations
no, not till the year they actually occur
results of operations of a component of an entity will be reported in discontinued operations if it
1. has been disposed of; or
2. is classified as "held for sale"
when does depreciation and amortization stop?
once management decides to dispose of a component, assets within the component are no longer depreciated or amortized
a component classified as held for sale is measured at the lower of
-it's carrying amount (BV) or
-fair value less costs to sell (NRV - costs to sell)
how is discontinued operations presented?
present as a separate component of income: results of discontinued operations, net of tax, are reported as a separate component of income, below income from continuing operations
where is a gain or loss recognized on the disposal disclosed?
face of the IS or in the notes to the FS
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