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BBMF3063 T82 Describe the accounting treatment for discontinued operations. How should an analyst treat discontinued operations?To qualify as discontinued operations, the assets and business activities of the divested segment must beobviously distinguishable from the assets and business activities of the remaining entity. Accounting andreporting for discontinued operations is two-fold. First, the income statement for the current and prior two years are restated after excluding the effects ofthe discontinued operations from the line items that determine continuing income. Second, gains or losses pertaining to the discontinued operations are reported separately, net of related tax effects. An analyst should separate and ignore discontinued operations in predicting future performance and financial condition.