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Examples of discontinued operations could include: Closure of unprofitable division. Redundancy due to merger. Sale of a product line.

A contingency arises when there is a situation for which the outcome is uncertain, and which should be resolved in the future, possibly creating a loss. The accounting for a contingency is essentially to recognize only those losses that are probable and for which a loss amount can be reasonably estimated.

Example of a Contingent Loss ElectroCorp has sold 100,000 units of the smartphone during the year. Based on historical data and quality control metrics, ElectroCorp estimates that 2% of the smartphones sold may experience defects within the warranty period, resulting in warranty claims.

Footnotes may provide additional information used to clarify various points. This can include further details about items used as a reference, clarification of any applicable policies, a variety of required disclosures, or adjustments made to certain figures.

What to disclose a description of the discontinuing operation; the business or geographical segment(s) in which it is reported in ance with IAS 14; the date that the plan for discontinuance was announced; the timing of expected completion, if known or determinable;

Assuming that the loss contingency is ?probable? and can be reasonably estimated, then a journal entry should be recorded to accrue the liability. The journal entry would be to debit legal expense and credit to record the legal liability.

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.

Financial statement footnotes are supplemental notes that are included with the published financial statements of a company. The notes are used to explain the assumptions used to prepare the numbers in the financial statements as well as the accounting policies adopted by the company.

The exact nature of these footnotes varies, depending upon the accounting framework used to construct the financial statements (such as GAAP or IFRS). Footnotes are an integral part of the financial statements, so you must issue them to users along with the financial statements.

Include as discontinued operations, net of tax, if the component of the business is classified as held-for-sale or is discontinued in the interim period. Include in the gain or loss section of the interim report and include the tax with all other income tax.