EXERCISE 6–1 Many companies report discontinued operations in their income statements and balance sheets.

Required:

a. What is your best estimate of the summary journal entry recording the disposal of discontinued operations.

b. What is included in the income (expense) items relating to discontinued operations as reported in the income statement?

c. Discuss the importance of discontinued operations in analyzing a company’s financial statements.

d. What is the rationale for separately reporting the results of discontinued operations?