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Accounting Treatment of Discontinued Operations

Describe the accounting treatment for discontinued operations. How should an analyst treat discontinued operations?

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Accounting - Discontinued Operations

Describe the accounting treatment for discontinued operations. How should an analyst treat discontinued operations?

According to the Generally Accepted Accounting Principles there is a special treatment to discontinued operations that is either being held for sale or was previous sold. This action has to be reported as a discontinuation of operations on a company's financial statements if the following conditions are met: resulting elimination and continuing involvement. Resulting elimination occurs when a disposal transaction yields in either an operations cash flows of a portion of the company is ...

Solution Summary

Discontinued operations should be examined to ensure that the company is appropriately reporting their assets in annual reports based on Generally Accepted Accounting Principles. Investors should be aware of how analysts treat discontinued operations to make appropriate investment decisions.

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