If this were a corporation income tax expenses would be part of the income statement and the gain on discontinued operations would be reduced by the income tax expense associated with the gain. Income and expenses related to discontinued operations can be found on line items on a company s income statement below continuing operations income and above net income.
Its book value was usd 100 million.
Income from discontinued operations example. Consider the following example. Revenue and expenses of a and x are given in the table below. Income taxes 5 250 000 income from continuing operations.
There is a group a containing a subsidiary x which at some point is classified as a discontinued operation under ifrs 5. Loss from operations of discontinued business component 6 000 000 income tax benefit. Income from continuing operations before income taxes.
Below is an example of a single step income statement containing discontinued operations. Loss on discontinued operations 3 900 000 net income. For example if the loss from discontinued operations is 100 000 and your tax rate is 30 percent the applicable tax benefit is 30 000 100 000 x 0 30.
Treatment of intragroup transactions with discontinued operations. Ned owns and runs ned s networks a company consisting of six television channels. Therefore your taxes payable will fall by this amount.
The segment earned revenue of usd 200 million and incurred costs of usd 150 million. Discontinued operations are listed separately on the income statement because it s important that investors can clearly distinguish the profits and cash flows from continuing operations from those. Intragroup transactions with discontinued operations.
Example of discontinued operations. Company c has income from continuing operations of usd 700 million. Therefore the after tax loss from discontinued operations is 70 000 100 000 30 000.
Discontinued operations are presented both under us gaap and ifrs. During the year it disposed off one of its segments segment a for usd 120 million.