I thought gains or losses from the sale of business segments was reported as infrequent item, included in income from continuing operations & before taxes, but, does that mean that these sales are considered “operating activities”?? Schweser states that for a manufacturing firm. Would there be any difference for a non-manufacturing firm?
Schweser Book 7, afternoon exam 1, Qs 48 (p.214)
Thanks.
It is part of income statement, and your net income reflects any gains or losses from sale of assets. Thus, you subtract gains or add losses when you calculate CFO (indirect method), and then post the full sale amount as part of CFI. Hope that helps, not sure if I answered your question…
Good thing to remember: REALIZED gains and losses are recognized on the income statement below income of continuing operations net of tax. Whereas, unrealized gains and losses that change value from their historical costs on their balance sheet are considered available for sale and are charged to comprehensive income.