TIP: A discontinued segment of business can have either a positive (income from operations or gain on disposal) or a negative (loss from operations or loss on disposal) effect on net income. Extraordinary gains increase net income, whereas extraordinary losses decrease net income. In the income statement for Eliason Inc. which appears above, the $56,000 flood loss was deducted in arriving at net income.
TIP: Material items not typical of operations are reported in separate sections of the income statement, net of related income taxes. Study this solution as an illustration of the sequencing of such items and the labeling of amounts.
TIP: All data presented in determining income before income taxes on a corporation's income statement is the same as for an unincorporated company.