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Hi can you please help. Using Greenwood Q228 in BPP exam kit.
When a sub is classified as a discon. op in the P/L, are its net assets removed from SFP and do they still remain?
In greenwood, you are asked for an analysis on the performance for 2016 & 17. Sub was not disposed of until 31.12.17. Therefore a perfect comparison of performance exists without removing the sub from the analysis.
Why has the solution calculated all the ratios with sub removed when a perfect comparison between both years is already there?
thanks
You are right in that the net assets are not removed from the SFP but they would be included as one line item under discontinued operations.
As we know that these balances will not be there next year as presumably the subsidiary will have been disposed then to get a like-for-like comparison and a better view of the future all of the ratios should be calculated without the discontinued operations balances.
Thanks
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