Question

If a company owns multiple lines of business in different areas such as cable TV, film entertainment, networks, and publishing, and decides to sell a specific unit, the resulting gain or loss would most likely be classified as a(n)______ on the income statement.

Answer 1

Answer: The answer is Discontinued Operation.

Explanation: Discontinued Operation in financial accounting is a term that is used to refer to part(s) of a company’s line of businesses or products that have been sold or shut down.

Discontinued operations are reported on the income statement, but separately from continuing operations.

The decision to list discontinued operations separately on the income statement is useful because it shows investors where the profits are coming from and which operations have ceased to function, especially useful when companies are about to merge.