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Hello Sir
I came across a question in the SBR Kaplan Book where an entity disposes a subsidiary and then states it as a discontinued operation. The question asks us to prepare a consolidated profit or loss statement.
The disposal happened in the mid-year. However, all the items in the statement weren’t time apportioned and the discontinued operation was calculated as the profit for the period time apportioned added with the group profit on disposal shown under the operating profit
Can you clarify this
With a discontinuance you show the results separately at the bottom of the P&L (as you know).
If the sub was sold mid-year you would only show 6 months of profit. You definitely can’t show profits after you have actually sold it………….that would be stealing!
If the sub is held for sale at the year end you would show 12 months of profit.
Does that solve it?
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