Discounted operations

Discounted operations refer to the disposal of a significant component of a business. Examples involve stopping an entire activity or eliminating a major class of customers. For example, Kmart reported as discontinued operations its decision to terminate its interest in four business activities, including PACE Membership Warehouse and PayLess Drug Stores Northwest.

Following the disposal of a significant component, the company should report on its income statement both incomes from continuing operations and income (or loss) from discontinued operations. The income (loss) from discontinued operations consists of two parts: the income (loss) from operations and the gain (loss) on disposal of the segment.