Net Income Discontinuous Operations
After-Tax Earnings or Losses from Discontinued Business Segments
Net Income Discontinuous Operations (commonly referred to as Net Income from Discontinued Operations) represents the after-tax profit or loss generated by business components that a company has disposed of or classified as held-for-sale. These discontinued operations include operating results during the holding period, impairment charges, and any gain or loss on the actual disposal. This amount is reported separately, net of tax, to allow investors to focus on the performance of the company's ongoing core businesses without the noise from exiting activities.
What is Net Income Discontinuous Operations?
Net Income Discontinuous Operations captures the after-tax financial impact of business segments or major lines of business that no longer form part of the company's future operations. Under US GAAP (ASC 205-20) and IFRS (IFRS 5), these are components whose disposal represents a strategic shift with a major effect on operations and financial results.
The amount includes: - Operating income or loss while the component was still owned - Impairment losses when classified as held-for-sale - Gain or loss on sale (proceeds minus carrying value) All presented net of applicable taxes and minority interests.
Separation ensures that core continuing operations reflect the sustainable ongoing business.
How It Flows into Total Net Income
Standard income statement structure:
This separate presentation prevents one-time divestiture effects from distorting trends in ongoing profitability.
Examples
Example 1: Profitable Divestiture
Example 2: Costly Exit
Large positive values often accompany portfolio simplification; negative values reflect cleanup of legacy issues.
Importance in Financial Analysis
This metric is key for: - Assessing core ongoing profitability (focus on continuing operations) - Understanding strategic restructuring or portfolio changes - Forecasting future earnings without transitory divestiture effects
Analysts typically exclude discontinuous operations when calculating normalized net income or forward estimates, as they are non-recurring by definition.
Warning: Frequent or large discontinuous operations may signal ongoing strategic challenges or poor past capital allocation.
Financial data providers clearly separate this amount to reconcile total net income with continuing performance.
Key Takeaways
Net Income Discontinuous Operations is the after-tax result from business segments being exited.
Includes operating results, impairments, and disposal gains/losses.
Reported separately to highlight ongoing core earnings.
Typically non-recurring—exclude from normalized profitability measures.
Reflects strategic portfolio decisions and their financial consequences.
Net Income Discontinuous Operations
After-Tax Earnings or Losses from Discontinued Business Segments
Net Income Discontinuous Operations (commonly referred to as Net Income from Discontinued Operations) represents the after-tax profit or loss generated by business components that a company has disposed of or classified as held-for-sale. These discontinued operations include operating results during the holding period, impairment charges, and any gain or loss on the actual disposal. This amount is reported separately, net of tax, to allow investors to focus on the performance of the company's ongoing core businesses without the noise from exiting activities.
Table of Contents
What is Net Income Discontinuous Operations?
Net Income Discontinuous Operations captures the after-tax financial impact of business segments or major lines of business that no longer form part of the company's future operations. Under US GAAP (ASC 205-20) and IFRS (IFRS 5), these are components whose disposal represents a strategic shift with a major effect on operations and financial results.
The amount includes: - Operating income or loss while the component was still owned - Impairment losses when classified as held-for-sale - Gain or loss on sale (proceeds minus carrying value) All presented net of applicable taxes and minority interests.
Separation ensures that core continuing operations reflect the sustainable ongoing business.
How It Flows into Total Net Income
Standard income statement structure:
This separate presentation prevents one-time divestiture effects from distorting trends in ongoing profitability.
Examples
Example 1: Profitable Divestiture
Example 2: Costly Exit
Large positive values often accompany portfolio simplification; negative values reflect cleanup of legacy issues.
Importance in Financial Analysis
This metric is key for: - Assessing core ongoing profitability (focus on continuing operations) - Understanding strategic restructuring or portfolio changes - Forecasting future earnings without transitory divestiture effects
Analysts typically exclude discontinuous operations when calculating normalized net income or forward estimates, as they are non-recurring by definition.
Warning: Frequent or large discontinuous operations may signal ongoing strategic challenges or poor past capital allocation.
Financial data providers clearly separate this amount to reconcile total net income with continuing performance.
Key Takeaways
Net Income Discontinuous Operations is the after-tax result from business segments being exited.
Includes operating results, impairments, and disposal gains/losses.
Reported separately to highlight ongoing core earnings.
Typically non-recurring—exclude from normalized profitability measures.
Reflects strategic portfolio decisions and their financial consequences.
Related Terms
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