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Three (3) conditions which must be present in order to present the result of operation as discontinued operation.

IFRS 5 (non current asset held for sale and discontinued operation) set out the principles governing the measurement and presentation on non current asset that are expected to be realized through sale rather than through continuing use. The standard also deals with reporting the results of operations that qualify as discontinued

A discontinued operation is a component of an entity that either has been disposed off or is classified as held for sale and

  • represent a separate major line of business or geographical area of operations

  • is a part of single coordinated plan to dispose a separate major line of business or geographical area of operation.

  • is subsidiary acquired exclusively with view to resale

Discontinued operations are presented separately at the end of profit or loss by including the profit after tax generated by discontinued operations. This figure should include the post tax gain or loss on disposal of assets of the operation or the gain or loss on re measurement following transfer to ‘held for sale’.
A component of an entity comprises operation and cash flows that can be clearly distinguished, operationally and for financial reporting purpose, from the rest of the entity. In other words, a component of an entity will have been cash generating unit or group of cash generating units while held for use.
An entity shall not classify as held for sale a non current asset (or disposal group) that is to be abandoned. This is because its carrying amount will be recovered principally through continuing use.

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