3.0 Important aspects of AS •The distinguishable component that is discontinuing should represent a separate major line of business or geographical area of operation and be distinguished operationally and financially for reporting purpose •Discontinuance of a component may not necessarily mean that the enterprise ceases to be a going concern. However, an enquiry into this aspect is essential. •Discontinuance should materially affect the nature and focus of the enterprise or lead to material reduction of operating facility resulting in withdrawal from a particular market 3.1An Initial Disclosure Eventis the occurrence of one of the following, whichever occurs earlier:(a) the enterprise has entered into a binding sale agreement for substantially all of the assets attributable to the discontinuing operation; or(b) the enterprise's board of directors or similar governing body has both (i) approved a detailed, formal plan for the discontinuance and (ii) made an announcement of the plan.3.2Disclosure of Initial Disclosure Event •The planned discontinuance should be disclosed in the first financial statement after Initial Disclosure Event. •The net profit or loss attributable to the discontinuing operation must be disclosed separately in the statement of profit and loss. The comparative information must also be disclosed. •The amount of gain or loss on sale of discontinuing operation is to be
CA Intermediate IPC IndigoLearn 62 recognized in the statement of profit and loss and disclosed separately. •The price and expected time of cashflow is to be disclosed. •Where an enterprise withdraws from or abandons a plan which was previously reported as discontinuance, the fact and monetary effect should be disclosed. •All significant events, amounts involved and events pertaining to Discontinuing Operations should be disclosed even in the interim financial reporting. •A discontinuance of operations is said to be complete when the plan is substantially completed or abandoned though full payment from the buyer may not yet have been received4.0 Presentation and Disclosures4.1 Disclosure aspects include•Description of Discontinuing Operations along with the segment which is reported•Date and nature of Initial disclosure event•Carrying amount of total assets and liabilities to be disposed off pertaining to the discontinuing operation•Amount of pre-tax profit or loss and tax expense attributable to discounting operation. •Fact of abandonment of discontinuance along with monetary effect. •Updating of IDE and significant changes in amounts until disposal is accomplished•Significant changes in amount and events causing such change in the interim financial reports4.2 Standard prescribes both narrative records and disclosure of quantitative information•Where initial disclosure requirement takes place after balance sheet date, the principles of Accounting Standard 4 must be applied.
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