FR - Discontinued Operation

Question 1

What is defined as discontinued operation

Answer 1

• A component of an entity that either has been disposed of or is classified as held for sale: criteria:
  1. It represents a separate major line of business or geographical area of operation
  2. It is part of a single co-ordinated plan to dispose of a separate major line of business or geographical location
  3. It is a subsidiary acquired exclusively with a view to resale

Question 2

Explain what component of an entity is

Answer 2

Comprises operation and cash flow that can be clearly distinguished operationally and for financial reporting purposes

Question 3

What must be met in order for discontinued operation to be applied

Answer 3

1. Determine whether the component meets one of the three criteria in question 1.
2. Determine whether the component assets (together) either:
   
   1. Have already been sold
   2. Meets the HFS criteria

Question 4

What is the initial measurement for the discontinued operation

Answer 4

• Components comprising a discontinued operation are measured at a lower of
  1. Carrying value
  2. FV less cost to sell, if not already disposed

Question 5

Explain what to do for the presentation of the discontinued operation

Answer 5

• Discontinued operations are non-current assets are presented separately on the statement of FP
• Qualified of HFS - presented as HFS’s current asset
• Statement of comprehensive income, shall disclose single amount comprising the total
  
  • Post tax profit or loss on the discontinued operation
  • Post tax gain or loss related to the measurement or disposal of the discontinued operation

The single amount must be
1. REvenue, expenses, and pre-tax profit of the discontinued operation
2. Income tax expenses or recovery about discontinued operation
3. Gain or loss on revaluing the disposal group or sale of the disposal group