ACCA SBR UK Syllabus D. Financial Statements of Groups entities - Discontinued Operation - Notes 22 / 34
An analysis between continuing and discontinuing operations improves the usefulness of financial statements.
When forecasting ONLY the results of continuing operations should be used.
Because discontinued operations profits or losses will not be repeated.
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What is a discontinued operation?
A separate major line of business or geographical area
or..
is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area
or..
is a subsidiary acquired exclusively with a view to resale
How is it shown on the Income Statement?
The PAT and any gain/loss on disposal
A single line in I/S
How is it shown on the SFP?
If not already disposed of yet?
Held for sale disposal group
How is it shown on the cash-flow statement?
Separately presented
in all 3 areas - operating; investing and financing
No Retroactive Classification
IFRS 5 prohibits the retroactive classification as a discontinued operation, when the discontinued criteria are met after the end of the reporting period