Discontinued Operations

Question 1

Relocation of employees

Answer 1

measured at FV when the liability is incurred

Question 2

Criteria for discontinued operations:

Answer 2

1. management commits to a plan of disposal
2. assets are available for sale
3. active program to locate a buyer has been initiated
4. sale is probable
5. asset is actively marketed for sale at a fair price
6. unlikely that the disposal plan will significantly change

Question 3

One time termination benefits

Answer 3

If employees are required to provide services beyond the minimum retention period - spread the expense over the period services are provided

Otherwise, the entire liability is recognized when the plan is communicated to employees

Question 4

Restructuring in business operations

Answer 4

• sale or termination of line of business
• closure of business activities in particular location
• relocation of business activities
• changes in management structure
• reorganizations that affect the nature and focus of operations

Question 5

Computation of Gain/Loss on Discontinued Operations

Answer 5

Add gain/loss on discontinued operations and gain/loss on disposal

assets valued at nrv