IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations

6 Classification of discontinued operation

A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and

1. represents a separate major line of business or geographical area of operations,
2. is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations or
3.  is a subsidiary acquired exclusively with a view to resale.

A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. In other words, a component of an entity will have been a cash-generating unit or a group of cash-generating units while being held for use

7 Presentation and Disclosure – discontinued operation

An entity shall disclose:

1. a single amount in the statement of comprehensive income comprising the total of:
   1. the post-tax profit or loss of discontinued operations and
   2. the post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation.
2. an analysis of the single amount in (a) into:
   1. the revenue, expenses and pre-tax profit or loss of discontinued operations and the related income tax expense
   2. the gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation; and the related income tax expenseThe analysis may be presented in the notes or in the statement of comprehensive income or in a separate income statements in a section identified as relating to discontinued operations i.e. separate from continuing operations.
3. the net cash flows attributable to the operating, investing and financing activities of discontinued operations either in the notes or cash flow statement

Adjustments in the current period to amounts previously presented in discontinued operations that are directly related to the disposal of a discontinued operation in a prior period shall be classified separately in discontinued operations. The nature and amount of such adjustments shall be disclosed.

Examples of circumstances in which these adjustments may arise include the following:

1. the resolution of uncertainties that arise from the terms of the disposal transaction, such as the resolution of purchase price adjustments and indemnification issues with the purchaser.
2. the resolution of uncertainties that arise from and are directly related to the operations of the component before its disposal, such as environmental and product warranty obligations retained by the seller.
3. the settlement of employee benefit plan obligations, provided that the settlement is directly related to the disposal transaction.

If an entity ceases to classify a component of an entity as held for sale, the results of operations of the component previously presented in discontinued operations shall be reclassified and included in income from continuing operations for all periods presented. The amounts for prior periods shall be described as having been re-presented.