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I was asked a question by my tutor in class regarding a situation where the management had decided to close down a part of a business 2 weeks before the year end and 2 wweks afterwards they closed it down, now i was thinking if the criteria of ifrs 5 is met then the year end should not be taken into account to recognize it as a discontinued operation, however my tutor said because even if the criteria is met, if they havent closed it down by the yearend ,then its not going to be recorded
could u shed some light on this matter sir
In order for it to be discontinued it needs to meet the criteria for a non-current asset held for sale. If it is not being held as a discontinued operation then presumably it means that one of the criteria is not being met. Presumably the non-closure of the business means it hasn’t met one of the criteria in that it is not available for immediate sale and so not held for sale and not discontinued.
Hope that clears things up. Remember that it is the criteria that are the important issue.
Thanks
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