Yakub02
Banned
A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for Financial Reporting purposes, from the rest of the entity. If an entity disposes of an individual non-current asset, or plans to dispose of an individual asset in the immediate future, this is not classified as a discontinued operation unless the asset meets the definition of a ‘component of an entity’.
The asset disposal should simply be accounted for in the ‘normal’ way, with the gain or loss on disposal included in the operating profit for the year.
An operation cannot be classified as discontinued in the statement of financial position if the criteria for classifying it as discontinued are met after the end of the reporting period.
For example, suppose that an entity with a financial year ending 30 June shuts down a major line of business in July and puts another major line of business up for sale. It cannot classify these as discontinued operations in the financial statements of the year just ended in June, even though the financial statements for this year have not yet been approved and issued.
A disposal group might be, for example, a major business division of a company. For example a company that operates in both shipbuilding and travel and tourism might decide to put its shipbuilding division up for sale.
If the circumstances meet the definition of ‘held for sale’ in IFRS 5, the shipbuilding division would be a disposal group held for sale
The asset disposal should simply be accounted for in the ‘normal’ way, with the gain or loss on disposal included in the operating profit for the year.
An operation cannot be classified as discontinued in the statement of financial position if the criteria for classifying it as discontinued are met after the end of the reporting period.
For example, suppose that an entity with a financial year ending 30 June shuts down a major line of business in July and puts another major line of business up for sale. It cannot classify these as discontinued operations in the financial statements of the year just ended in June, even though the financial statements for this year have not yet been approved and issued.
A disposal group might be, for example, a major business division of a company. For example a company that operates in both shipbuilding and travel and tourism might decide to put its shipbuilding division up for sale.
If the circumstances meet the definition of ‘held for sale’ in IFRS 5, the shipbuilding division would be a disposal group held for sale
