Coverage of Discontinued Activities
The net income and loss history must demo individually the public presentation of the discontinued activities individually from those of go oning activities to guarantee that the fiscal information being disclosed is both relevant to the demands of users and dependable. To besides guarantee comparison of fiscal information the anterior twelvemonth histories must besides be re-drafted or restated to include the consequences of the discontinued operation individually.
IFRS 5 allows the concern to describe discontinued operations in the net income and loss history utilizing one of the following options:
- The concern can elect to unwrap merely the net income or loss made by the discontinued concern in the net income and loss history.
- The concern should so do a full revelation of the discontinued events in the notes to the histories.
- The note to the histories should unwrap the elaborate fiscal consequences of the discontinued activity or the sold portion of the concern.
- The concern can besides elect to unwrap on the face of its histories the net income or loss made by the discontinued operations.
- The net income and loss will unwrap in item the dislocation of the grosss, operating costs, involvement costs, and the revenue enhancement associating to the discontinued operations.
Why should Discontinue Operations be Disclosed Individually?
The public presentation of discontinued operations is disclosed individually from the public presentation of go oning events to let the users of accounting information to: Appreciate the fiscal effects of the closing or sale of the discontinued operation. If the public presentation of the discontinued operation is disclosed individually users of accounting information will be able to understand the sum of concern that has been lost, the portion that will no longer be portion of the concern in future. They will be able to understand what both the hereafter gross watercourses and cost constructions of the staying concern will be in future.
Appreciate the implicit in public presentation of the staying concern. Users will be able to determine the likely hereafter returns that the new or staying concern will bring forth in future. Users will be able to reap from the size of this retrenchment the size of the concern lost, therefore they will be able to calculate and do more informed judgements of the staying concern.