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IFRS 5 – Discontinued operations – ACCA Financial Reporting (FR)

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  1. According to IFRS 5, paragraph 34, when an operation is classified as discontinued, comparative information for prior periods must also be re-presented in the financial statements as if the operation had been discontinued in that earlier period.

    So for Ruta Co:

    2016 figures must be restated to separate:

    Continuing operations

    Discontinued operations (the business that ceased in March 2017)

  2. After digging around I found a reply on the ask the tutor forum on why the figures of 2016 are adjusted for

    “IFRS 5 states that for the detailed disclosure of the revenue/costs in profit or loss we need to cover all the periods presented in the financial statements. Sometimes this is taken to mean on the SFP also, but this is not the case.”

    This explanation does come across as very confusing because if we consider the rules given in the notes, there is no information given regarding any intention of selling the business in 2016.

  4. Hello Sir, thanks for the lectures, it is really amazing.

    The lecture stated that we only have to report and disclose a discontinued operations in the period that the asset was either sold or decided to be held for sale. but in the example 3, the discontinued operations iwas adjusted for in year 2016 though the question stated that the business wound up in March 2017. I expected that we maintained the figures for 2016 as it is, just for comparative purpose.

    Kindly clarify why we have to report and disclose discontinued operations in 2016.

    Thank you.

  5. Hello Sir, thanks for the lectures, it is really amazing.
    I have a clarification though.
    During the lecture on the IFRS 5, discontinued operations, you stated that we only have to report and disclose a discontinued operations in the period that the asset was either sold or decided to be held for sale. However, in the example 3, I noticed you adjusted for the discontinued operations in year 2016 though the question stated that the business wound up in March 2017. I expected that we maintained the figures for 2016 as it is, just for comparative purpose.

    Kindly clarify why we have to report and disclose discontinued operations in 2016.

    Thank you.

  7. Also,
    we are asked to prepare the statements for year ended 31 December 2017 in example 3.
    please advise why we have also done 2016 in this lecture? will it be asked in the exam?
    Thank you!

  8. Please help….
    no where in Example 2 does it say it is being held for sale… it mentions shut down but not disposal or held for sale…
    Am I silly to assume they were just shutting and cutting their losses?

    thank you.

  9. The gain of $7,000 was added to admin expenses, why was this done? Am I to assume that such gain was initially removed ??? If so why add back, what is the logic behind this approach.

    Additionally, will it be necessary to change figures for previous years prior to the decision to discontinue the asset?

    • It was mentioned in the question, gain on disposals of NCA was netted off against the admin exp, as such to show the analysis of discontinued operation, the actual figures for each item was shown.

  11. Hi, in example 3 why did you go back and reinstate 2016 figures when the discontinued operations was 30 March 2017?
    In your previous example (2) you ignored the previous year?

    Thanks

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