Question

What items must be removed from continuing operations for a discontinued operation?

a) Revenues
b) gains
c) assets
d) expenses
e) tax expense

Answer 1

Items that must be removed from continuing operations for a discontinued operation include revenues, gains, assets, and expenses, but not tax expenses.

Step-by-step explanation:

When preparing financial statements, certain items must be removed from continuing operations for a discontinued operation. These items include:

• Revenues: Any revenues generated by the discontinued operation should be removed from continuing operations.
• Gains: Any gains realized from disposal of assets related to the discontinued operation should also be removed.
• Assets: The assets of the discontinued operation, including property, plant, and equipment, should be removed from the balance sheet.
• Expenses: The expenses directly associated with the discontinued operation must be eliminated.

However, tax expenses are not specifically required to be removed from continuing operations for a discontinued operation.