F1 - Discontinued Operations

Question 1

The gain (loss) from discontinued operations can consist of…

Answer 1

An impairment loss, a gain (loss) from actual operations, and gain (loss) on disposal.

Question 2

In what period are the following reported:

An impairment loss?

A gain (loss) from actual operations?

A gain (loss) on disposal?

Answer 2

All are reported in the period in which they occur.

Question 3

In reporting discontinued operations, how is a “component” of an entity defined under U.S. GAAP and IFRS?

Answer 3

U.S. GAAP

1. An operating segment
2. A reportable segment
3. A reporting unit
4. A subsidiary
5. An asset group

IFRS

1. A separate major line of business or geographical area of operations
2. A subsidiary acquired exclusively with a view to resale

Question 4

How do we account for subsequent increases in the fair value of a discontinued component?

Answer 4

A gain is recognized for the subsequent increase in fair value minus cost to sell (but not in excess of the prefiously recognized cumulative loss). The gain is reported in the period of increase.