- This topic has 3 replies, 2 voices, and was last updated 6 years ago by
.
- Posts
Hi I’ve a question on Ex 2 -Discontinued operations in Chapter 8.
In the answer – the closed car manufacturing operation is classified as discontinued operations in 2006 – why it is not classified as “held for sale” instead of “discontinued operations”? Would there be any difference in its presentation in financial statements in case it would be classified as held for sale and in case it would be classified as discontinued operations?
I’m a little bit confused about it. Could you please clarify? Thank you!Hi,
The operation has been disposed of so it is classified as discontinued. It cannot be held for sale as it is not being sold.
So in the SPL it will be disclosed separately from continuing operations whilst on the SFP it will be gone as it has been disposed of.
Hope that clears it up. If it hasn’t then just ask, IFRS 5 is always a bit complicated.
Thanks
Hi, thank you for the clarification. I’ve one more issue I’d like to ask. According to the part of the definition of discontinued operations, a discontinued operation is „a component of the entity that is classified as held for sale and is a subsidiary acquired exclusively with a view to resale”. 3 points here:
1.If a business buys a subsidiary with a view to resell will it be classified as an asset held for sale in SFP and as a discontinued operation on SCFS and SPL?
2.Going further with conclusions – any non-current asset bought with a view to resell which meets certain criteria (trances:) should be classified as an asset held for sale and at the same time as a discontinued operation?
3.So – the asset held for sale is always a discontinued operation but discontinued operation is not always an asset held for sale? Is this statement right?Thank you!!!
Hi,
Glad we’ve cleared up the earlier point. On the other points:
1. Yes, if it is bought with a view for resale then it is a discontinued operation in both the SCF and SPL, whilst being a NCA-HFS in the SFP.
2. Non-current assets aren’t usually bought for resale and so wouldn’t be classified as such.
3. I’d not think of it in this fashion and always read the scenario carefully as you never know what weird and wonderful scenario we could be confronted with, but it is usually as such for a disposal group.
Thanks
- You must be logged in to reply to this topic.