A transaction that is unusual in nature or infrequent in occurrence should be reported as a component of income from continuing operations. It cannot be shown as net of taxes as tax is a separate line item to arrive at the income from continuing operations (Mnemonic: ON TID NO C).

Discontinued operations are included in the net income and disclosed in the notes to the Financial Statements. In general, the application of Generally Accepted Accounting Principles (GAAP) to the interim financial reporting is no different than for a report covering one year, since interim Financial statments are an integral part of the annual Financial statements.

Discontinued operations and extraordinary items are included in the net income and disclosed in the notes to the Financial statement. Based on conservatism; losses incurred are recognized in the same period. In general, the application of Generally Accepted Accounting Principles (GAAP) to the interim financial reporting is no different than for annual report, since interim Financial statements are an integral part of the annual Financial statements. Hence the extraordinary loss incurred in a quarter needs to be reported entirely in that quarter.

Expected gains or losses from operations in future periods are not considered while accounting for discontinued operations, until the period of occurrence. Only exception being indirect recognition of expected losses via Impairment testing.

In the given scenario, Maxx estimated that Alpha's 20X3 operating loss would be $500,000 and that the proceeds from the disposal of the segment's assets will be $300,000 less than their carrying amounts.

As explained we will not consider estimated loss of $500,000, rather Alpha's 20X2 operating loss of $1,400,000 will be considered. In addition, when assets have carrying values that exceed their fair values, impairment losses will be recognized, which will also be included in discontinued operations since the assets are related to the discontinued segment.

In its 20X2 income statement, Maxx should report $1,400,000 loss from operations and the $300,000 impairment loss for a total of $1,700,000, which will be net of tax at a rate of 30% or $510,000.

Net loss on disposal of discontinued segment = $1,700,000 - $510,000 = $1,190,000.

The earnings per share must be reported on the face of a public company's income statement for the following items:

Tax provision for income from continuing operations appears after operating and non-operating income. So, operating income is not subject to intra period taxes. The Mnemonic for comprehensive income: ON TID NO C.