This question-specific review guide is tied to the answer reasoning for a PracticeTestVault item. Use it after you answer the question so the review stays focused on what the prompt actually tested.
What this question is testing
Objective: Income Statement Presentation
Prompt focus: Which item would be reported below the line as a discontinued operation under ASC 205-20?
Why the correct answer works
Net of tax results of a disposed component representing a strategic shift with major effect
Disposal of a component representing a strategic shift qualifies as discontinued operations.
Why the tempting wrong answer fails
Incorrect. Inventory impairments appear in continuing operations.
Plain-language takeaway
Discontinued operations are reported below the line, net of tax, and require disposal (or held-for-sale classification) of a component plus a strategic shift with major effect.
Simple analogy
Think of income statement presentation like following a short checklist: identify the clue, confirm the rule, and then make the move that fits this exact scenario.
How to review it before a retake
- Underline the command word and name what the question is asking before rereading the choices.
- Compare the correct answer against the closest distractor and write the exact detail that separates them.
- Retest this objective with a fresh question without looking at the rationale first.