Question

Which of the following best explains why the taxes on discontinued operations are reported separately from taxes on continuing operations? Multiple Choice The tax rate applied to discontinued operations typically is lower than that applied to continuing operations. The taxes on discontinued operations are not expected to recur in future years. The tax rate applied to discontinued operations typically is higher than that applied to continuing operations. Companies are allowed to delay tax payments for discontinued operations for up to five years.

Answer 1

Answer:

The statement that best explains why the taxes on discontinued operations are reported separately from taxes on continuing operations is:

The taxes on discontinued operations are not expected to recur in future years.

Explanation:

Discontinued operations refer to the cessation of some business activities or segments.  They are usually reported as a separate line item.  Therefore, all the gains and losses for that discontinued division must be reported separately on the company's income statement. The purpose is to distinguish them from those of continuing operations.