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IAI Actuarial Core Principles · Business Finance · Construction and features of company accounts and reports

Which statement about discontinued operations in a company's statement of profit or loss is correct?

The post-tax result of a discontinued operation, including any disposal gain or loss, is shown as a single amount on the face of the statement, separate from continuing operations, so users can judge the ongoing business separately.

  1. AThey are shown as a single post-tax amount separate from continuing operationsCorrect
  2. BThey are shown only in the notes and never on the face of the statement
  3. CThey are deducted from revenue before gross profit is calculated
  4. DThey are included in administrative expenses
  5. They are presented only if the loss exceeds 10% of profit

Explanation

The post-tax profit or loss of a discontinued operation, including any gain or loss on disposal, is presented as a single line below profit from continuing operations. This helps users forecast future performance.

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