ASPE 3475 - Disposal of Long-lived Assets and Discontinued Operations

Question 1

Discontinued operation (ASPE)

Answer 1

• A discontinued operation is a component of an entity where its operations and cash flows can be clearly distinguished from the rest of the entity and it has been disposed of or classified as held for sale
• Report results of discontinued operations on I/S for current and prior periods, net of tax

Reference: ASPE 3475.03, .30

Question 2

Assets held for sale (ASPE)

Answer 2

• Long-lived assets to be disposed of other than by sale should continue to be classified as held and used until they are disposed of
• Long-lived assets to be sold should be classified as held for sale when all of the following are met:
  o Management commits to a plan to sell
  o It’s available for immediate sale in its present condition
  o Steps to locate a buyer and complete the sale have started
  o The sale is probable and expected to occur within a year
  o It’s being actively marketed at a reasonable price
  o Actions required to complete the sale indicate it’s unlikely significant changes to the plan will be made or that the plan will be withdrawn
• Asset held for sale should be measured at lower of carrying amount or fair value less cost to sell, and should not be amortized

Reference: ASPE 3475.04, .08, .13