Discontinued Operations - Audit of Accounting Estimates
A discontinued operation is a component of an entity that either has been disposed of or is held for sale. So it might be a subsidiary or a main line of business or geographical area. Then it will have been a cash-generating unit or collection of cash-generating units as described in IAS 36 Impairment of Assets.
Disclosures of discontinued operations involved as:
- Analysis of the post-tax loss or profit in revenue, pre-tax profit or loss, expenses and the related income tax expense;
- The loss and gain recognised on measurement to fair value less costs to sell or on disposal, and the concerned income tax expense;
- Net cash flows attributable to operating, financing and investing activities;
- Assets held for sale individually from all other assets; and
- Liabilities of a disposal collection held for sale individually from all other liabilities.
As regards measurement and recognition, IFRS 5 does not establish any individual principles, however relies upon those of IAS 36 Impairment of Assets and IAS 37 Provisions, contingent Liabilities and Contingent Assets, and also on IAS 19 Employees Benefits and IAS 16 Property, Equipment and Plant.
IAS 37 explains whenever a provision should be well known on discontinuance. Especially, a restructuring provision should merely involve the direct expenditure arising from the restructuring that are both;
(i) Necessarily entailed through the restructuring, and
(ii) Not associated along with the ongoing activities of the enterprise
It may be essential, on a discontinuance, to apply the provisions of IAS 36 in knowing impairment losses.