Accounting for Discontinued Operations.

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    Bishir Alia
    Participant

    Hello,

    I am kind of confused on reporting of Discontinued Operations, is it the actual selling of an asset that you used to own or is it simply a reporting of revenue and expenses of a segment you decided to discontinue in the reporting time.

     

    regards.  

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    Lynn Roden
    HOCK international

    Hello Bishir Alia,

    It is both. Once the component meets the criteria to be classified as held for sale on the balance sheet, then during the period while a buyer is found and the sale is completed, all the net income or loss from that operation during that period should be reclassified on the income statement to discontinued operations. And if comparative income statements are being presented, all the net income or loss from that component’s operation during the previous periods being presented for comparison should also be reclassified to discontinued operations on those comparative income statements. Then when the sale is finalized, the gain or loss on the sale itself is also reported in the discontinued operations section of the income statement.

    Lynn

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