when a company discontinues and disposes of an operation,

CFA Level I
#1

when a company discontinues and disposes of an operation, the action is considered: (A) an extraodinary item (B) separtely and is shown on the income statement

#2

B

#3

A?

#4

strangedays, you always get the right answer, please explain why A is not correct?

#5

Because to be recorded as extraordinary must be “unusual AND infrequent”

#6

he is right, I just pulled up SECRET SAUCE here is the deal 1) seperately – discontinued ops 2) unusual/infrequent: write offs, impairments, restructurings 3) extraordinairy (means both unusual and infrequent) – example includes hurt assets b/c of a hurricane or tornado.

#7

also remember it is reported net of tax

#8

I’m sure you guys will pass the June exam, well prepared