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17 September, 05:45

In order for a loss on the disposal of a discontinued operation to be classified on the income statement as a discontinued operation, it must be unusual in nature. True or False True False

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  1. 17 September, 06:48
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    False

    Explanation:

    When a company divests from a product line or shuts down one of it's operations which earlier formed part of it's core business, such a process is referred to as discontinuation of operations.

    Loss arising out of disposal of discontinued operations yields tax benefits in the form of tax savings since such a loss is tax deductible.

    The loss on the disposal of discontinued operations is reported in a separate section of the income statement.

    Such losses are deducted from the income of continuing operations to arrive at the net income of an entity.
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