when operations are discontinued a company has multiple line items to report on its financial statements although the business component is being shut down it still could generate a gain or loss in the current accounting period 
the total gain or loss from the discontinued operations is thus reported followed by the relevant income taxes this tax is often a future tax benefit because discontinued operations often incur losses to determine the company s total net income ni the gain or loss from discontinued operations is aggregated with that of continuing operations to not confuse adjustments to the financial statements that relate to previously reported discontinued operations a company may classify the adjustments separately in the discontinued operations section of its financials adjustments may occur because of benefit plan obligations contingent liabilities or contingent contract terms if the buyer of a discontinued operation assumes the debt associated with the operation then any interest expense before the sale is allocated to discontinued operations generally accepted accounting principles gaap do not allow general corporate overhead to be allocated to discontinued operations a company may report discontinued operations under gaap as long as two conditions are met if these two conditions are met then a company may report discontinued operations on its financial statements 1the reporting rules under international financial reporting standards ifrs differ slightly from gaap a discontinued operation must meet two criteria unlike gaap reporting requirements ifrs rules permit equity method investments to be classified as held for sale moreover under ifrs entities may continue involvement with the discontinued operation as with gaap discontinued operations are reported in a special section of the income statement 2