F1_Module 5 I/S: Discontinued Operations

Question 1

When will the results of a operations of component, or a group of components, or a business or non-profit activity will be reported as discontinued operations?

Answer 1

When it has been (1) disposed of or (2) is classified as held of sale.

Question 2

When is a disposal reported in discontinued operations?

Answer 2

When the disposal represents a strategic shift that has or will have a major effect on an entity’s operations and financial results.

Question 3

Does depreciation and amortization continue after management decides to dispose of an asset?

Answer 3

No

Question 4

How is a component classified as held for sale measured?

Answer 4

Lower of carrying amount (BV) or Fair value less cost to sell (NRV).

Question 5

Is a gain or loss from discontinued operations disclosed?

Answer 5

Yes, either on the face of the income statement, or in the notes to the financial statements.