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Hello Sir/Madam,
In the notes provided by this website, chapter 4, Example 1, Ruta Co : can you please tell me why we subtracted the loss of discontinued operations FROM the profit of continuing operations while complying with the provisions of IFRS 5; disclosing the info. on the face of the SOFP/SOCI.
I was thinking when we already have subtracted the revenue, COS, admin & distribution cost related to discontinued operations than the net figure ( i.e loss from discontinued operation ) would have been adjusted automatically.
Can you please tell me the rationale behind the last subtraction of (loss from discontinued operations) ?
Thanks!
It hasn’t automatically been adjusted.
Think about it!
By separating out the figures attributable to the discontinued operation we are effectively looking at two columns of figures
The first relates to continuing operations and the second to the discontinued operation
If we were to add these across / combine them, we would have the figures as given in the question
Now, prepare the statement of profit or loss based purely on the figures for the continuing operation and arrive at the net profit for the year of 233 (and 161 for last year)
But that means that we haven’t included any amounts in respect of the discontinued operations the net result of which was a loss of 3 (last year was 1)
So now deduct from the net profit from continuing operations the loss suffered by the discontinued operation and arrive at the year’s net figure of 230 (160)
OK?
This question would have been MUCH better posted on the Ask ACCA Tutor F7 page!
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