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Dear tutor,
If there is a discontinued operation during a year in SoPL, can we write audit procedure to check the disposal group at year end of previous year as it should have been held for sale on SoFP in previous year initially ?
Thanks,
Short answer – no – a disposal group held-for-sale gives rise to a discontinued operation but not vice versa.
IFRS 5 classifies an operation as discontinued at the date the operation:
a) meets the criteria to be classified as held for sale; or
b) when the entity has disposed of the operation.Following on from this:
(a) if a disposal group is held-for-sale at 31 December 2021, say, the discontinued operation will be shown separately in the statement of comprehensive income for THAT year (i.e. the year ended 31 December 2021).
(b) an operation could be discontinued in 2022 by announcing a formal disposal plan or entering into a binding sale agreement (whichever is earlier) – that does not mean that the disposal group met the held-for-sale criteria at 31 December 2021.Hope that makes sense!
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