Income from Disc Operations Flashcards
Disc Operations
Net of taxes
3 Components
Year held for sale: operating losses for the WHOLE year and impairment loss
Year of sale: operating loss till the date of sale; gain or loss on sale
* all net of taxes; always difference so if loss then tax benefit
component
lowest level for which operations can be distinguished for operating and financial reporting purposes like segment, unit, subsidiary, single transaction disposal
IFRS Component
geographic, line of bus, no segment, subsidiary bought for resale
Business
Activities to provide return to investors or owners
Non Profit
Purpose to provide benefits other than profits; to fulfill mission
Held for sale
at lower of CV or NRV
NRV
fv- Cost of sale; what you could have sold it for
Held for sale when ALL are met
1) plan to sell
2) available for immediate sale
3) active program to locate buyers
4) sale probable and expected withing a year
5) sale actively marketed
6) unlikely that plan will be changed or withdrawn
Impairment testing
IFRS: Assets and Liabilities tested at individual level
GAAP: Entire component tested for impairment
Type of entity
Held for sale or disposal
Disc Operations if
Strategic shift; had or will have a major effect on the entity’s operations or financial results
Strategic shift
GEL
Geographic; equity method invesment; major line of business
Impairment Loss
If SP/NRV (7) < BV(10) then loss of 3 and mark down to 7 which is now CV
Subsequent increase in FMV: If SP/NRV now 11 and CV is 7 then gain of only upto 3 can be recorded
Extent of CUMULATIVE loss from previous period
Once impaired
Assets are no longer depreciated or amortized
