discontinued operations

Examples of discontinued operations in the following topics:

• Special Reporting

  • Irregular items require special reporting procedures, and include discontinued operations, extraordinary items, and the reporting of the resultant EPS.
  • Two examples of irregular items are discontinued operations and extraordinary expenses.
  • Discontinued operation is the most common type of irregular item.
  • Shifting business location(s), stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations.
  • Income tax is allocated to income from continuing operations before tax, discontinued operations and extraordinary items.

• Reporting Irregular Items

  • Discontinued operations are the most common type of irregular items and must be shown separately.
  • A discontinued operation is a component of an enterprise that either has been disposed of or is classified as "held for sale," and:
  • represents a separate major line of business or geographical area of operations; and
  • Shifting business location(s), stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations.
  • Differentiate among discontinued operations, extraordinary items, and changes in accounting principles

• Other Expenses

  • Other expenses include SG&A, depreciation, amortization, R&D, finance costs, income tax expense, discontinued operations expenses.
  • General expenses- general operating expenses and taxes that are directly related to the general operation of the company, but don't relate to the other two categories.
  • Discontinued operations are the most common type of irregular items.
  • Shifting business location(s), stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations.
  • Discontinued operations must be shown separately.

• Preparation of the Income Statement

  • Other expenses or losses not related to primary business operations (e.g., foreign exchange loss).
  • Discontinued operations is the most common type of irregular items.
  • Shifting business location(s), stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations.
  • Discontinued operations must be shown separately.Disclosures
  • Explain the difference between the operating and non-operating section of the income statement

• Pro Forma Income Statement

  • Revenue - Cash inflows or other enhancements of assets of an entity during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major operations.
  • Other expenses or losses - not related to primary business operations, (e.g. foreign exchange loss).
  • Discontinued operations is the most common type of irregular items.
  • Shifting business location(s), stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations.
  • Discontinued operations must be shown separately.

• Times Interest Earned Ratio

  • Analysts often use "Operating Income" as a proxy for EBIT when complex accounting situations, such as discontinued operations, changes in accounting principle, extraordinary items, etc., are reported in a company's financial statements.

• Sample Income Statement

  • It then calculates operating expenses which, when deducted from the gross profit, yield 'income from operations. ' The difference of other revenues and expenses is then applied to the income from operations.
  • It excludes operating costs such as selling, administration, advertising, or R&D.
  • Other expenses or losses: Expenses or losses not related to primary business operations (foreign exchange loss).
  • Discontinued operation is the most common type of irregular item.
  • Shifting business locations, stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations, which must be shown separately.

• Earnings per Share

  • In the United States, the Financial Accounting Standards Board (FASB) requires that companies' income statements report EPS for each of the major categories of the income statement: continuing operations, discontinued operations, extraordinary items, and net income.
  • The EPS formula does not include preferred dividends for categories outside of continued operations and net income.
  • Earnings per share for continuing operations and net income are more complicated; any preferred dividends are removed from net income before calculating EPS.

• Shaping

  • Shaping is a method of operant conditioning by which successive approximations of a target behavior are reinforced.
  • In his operant-conditioning experiments, Skinner often used an approach called shaping.
  • As the subject moves through each behavior trial, rewards for old, less approximate behaviors are discontinued in order to encourage progress toward the desired behavior.
  • In this way, shaping uses operant-conditioning principles to train a subject by rewarding proper behavior and discouraging improper behavior.

• The Derivative as a Function

  • Using this idea, differentiation becomes a function of functions: The derivative is an operator whose domain is the set of all functions that have derivatives at every point of their domain and whose range is a set of functions.
  • If we denote this operator by $D$, then $D(f)$ is the function $f'(x)$.
  • The operator $D$, however, is not defined on individual numbers.