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Basic Question 5 of 10
When a company sells a major portion of its business, it reports the operating results of the discontinued portion of the business on the income statement under ______.
B. cumulative effect of a change in accounting principle.
C. discontinued operations.
A. extraordinary items.
B. cumulative effect of a change in accounting principle.
C. discontinued operations.
User Contributed Comments 5
| User | Comment |
|---|---|
| katybo | if the portion is independent, right? |
| sarath | If the portion is separate both physically and operationally then it will be considered discounted operations and it will be reported under the discounted operations.... |
| Rotigga | The key is that if a firm divests a Portion of a segment, then it is an Unusual or Infrequent Item, but if sheds a complete segment, then it goes under Discontinued Operations. |
| ridone | to my understanding if the word "major" were removed from the question the correct answer would be B? |
| ddrmax | @ridone. if 'major' is removed, it will be reported as a usual/infrequent item |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe the concept of sustainable (persistent) earnings;
describe indicators of earnings quality;
explain mean reversion in earnings and how the accruals component of earnings affects the speed of mean reversion;
CFA® 2025 Level II Curriculum, Volume 2, Module 14.