Question

Which of the following items are listed as separate line items on an income statement in order to facilitate analysis and understanding? (Select all that apply.) Select one or more: a. A gain on sale of a major division of a company b. An increase in the sale price by more than 20% c. The effect on prior years of change in depreciation method d. A loss due to fire

Answer 1

Answer:

A gain on sale of a major division of a company (A)

Explanation:

Gain on the sale of a major division usually come after the continuing operations section, meaning below the "net income from continuing operations" line.

A discontinued operation is a separate major business division or geographical operation that the company has disposed of or is holding for sale.

Because of the significance of this transaction to the understanding of the owners of the company, accounting standard required that a single separate line  display of the gain or loss on disposal should be included in the income statement.