Discontinued operations

Operations that the management has decided to dispose of, but either has not yet done so.  It could also have been disposed of in the current year after the operation had generated income or losses.

To be accounted for as a discontinued operation, the business must be physically and operationally distinct from the rest of the firm.

Any income or loss from discontinued operations is reported separately in the income statement, net of tax, after income from continuous operations.

As the discontinued operation will no longer provide earnings to the company, an analyst can eliminate such items in forecasting a company’s financial performance.