Intermediate Accounting

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Amjad Awad A discontinued operation occurs when a segment or certain product line in a company's business has been sold, disposed of or abandoned and is subseque…moreA discontinued operation occurs when a segment or certain product line in a company's business has been sold, disposed of or abandoned and is subsequently reported on the company's income statement as income separate from continued operations. Because income from discontinued operations is listed separately on the income statement, investors are less likely to be misled as to the source of a company's profit. This is especially useful when companies merge, since parsing out which assets are being divested or folded up gives a clearer picture of how a company will make money in the future.
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