inancial reporting
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Why is it important to report discontinued operations or extraordinary items separately from income from continuing operations? Is this method of reporting allowed? What concerns does this type of reporting create? Does the average investor understand the difference? In what way(s) might the information be presented to clarify meaning for investors?
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Why is it important to report discontinued operations or extraordinary items separately from income from continuing operations?
It is important to report discontinued operations or extraordinary items separately. In case of discontinued operations it is the segment of the business that has been sold, disposed of or abandoned. Income from discontinued operations are reported separately so that investors are not duped about the source of profit. Similarly, extraordinary items mean that gains or losses from financial statements which are infrequent and unusual. These are accounted separately so that they do not ...
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