IncomeLossFromDiscontinuedOperationsNetOfTaxIncomeLossFromDiscontinuedOperationsNetOfTaxAttributableToReportingEntityDiscontinuedOperationGainLossOnDisposalOfDiscontinuedOperationNetOfTaxDiscontinued operations is the after-tax income or loss from a part of a company that has been sold, spun off, or classified as held for sale, when that disposal represents a strategic shift with a major effect on the company's operations and financial results. It is reported as a single line below income from continuing operations.
The line combines two things: the discontinued unit's own operating results for the period, and any gain or loss on disposing of it, including write-downs to fair value less costs to sell. Separating them from continuing results lets investors see what the remaining business earns.
Classification and presentation are governed by ASC 205-20. After ASU 2014-08, only disposals that amount to a strategic shift qualify, such as exiting a major line of business or a major geographic area. Selling a single store, plant, or small product line usually does not. Regulation S-X Rule 5-03.14 gives discontinued operations its own caption, placed after income from continuing operations and before net income.
In XBRL the total is IncomeLossFromDiscontinuedOperationsNetOfTax, including any portion owned by noncontrolling holders, with IncomeLossFromDiscontinuedOperationsNetOfTaxAttributableToReportingEntity giving the parent's share. The disposal gain or loss is often broken out as DiscontinuedOperationGainLossOnDisposalOfDiscontinuedOperationNetOfTax. The amount is shown net of its own income tax, so it does not flow through the income tax expense line. Earnings per share for discontinued operations must also be shown separately.
When a unit is reclassified, prior periods are recast so that every year presented treats it as discontinued. This makes historical revenue and operating income comparable, but it means figures from an older filing may not match the same year in a newer one. Analysts generally build forecasts and valuation multiples on continuing operations and treat discontinued results, especially large disposal gains, as non-recurring.
A: No. The disposal has to represent a strategic shift with a major effect on operations and results. Routine sales of smaller units are reported within continuing operations, usually as a gain or loss on sale.
A: Yes, but it is reported net of its own tax. The related tax does not appear in income tax expense, which covers continuing operations only.
A: When a business is classified as discontinued, the company recasts prior periods to remove it from continuing results. Earlier revenue and profit figures shrink to reflect only the businesses that remain.
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