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DISCONTINUED OPERATIONS

Key Definitions

Discontinued Operation - Is a component of an entity that either has been disposed of or is

classified as held for sale, and;

a. Represents a separate major line of business or geographical area of operations,

b. Is part of a single co-ordinated plan to dispose of a separate major line of business or
geographical area of operations, or
c. Is a subsidiary acquired exclusively with a view to resale.

Component of an Entity – Operations and cash flows that can be clearly distinguished,
operationally and for financial reporting purposes, from the rest of the entity.

Presentation of Discontinued Operations

 As a single amount on the face of the income statement comprising the total of:

a. The sum of the post-tax profit or loss of the discontinued operation; and

b. The post-tax gain or loss recognized on the measurement to fair value less cost to sell or
on the disposal of the assets or disposal group(s) constituting the discontinued operation.

 In the notes or on the face of the income statements – An analysis of the

single amount as presented above into:

a. The revenue, expenses and pre-tax profit or loss of discontinued operations;

b. The related income tax expense
c. The gain or loss recognized on the measurement to fair value less costs to sell or on the
disposal of the assets constituting the discontinued operation; and
d. The related income tax expense.

 Cash flow statement presentation - The net cash flows attributable to the
operating, investing, and financing activities of a discontinued operation shall be separately
presented on the face of the cash flow statement or disclosed in the notes.
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INTERIM REPORTING

Key Definitions

Interim Period – Is a financial reporting period shorter than a full financial year.

Interim financial report – A financial report containing either a complete set of financial
statements or a set of condensed financial statements for an interim period.

Minimum Components of an Interim Financial Report

a. Condensed balance sheet

b. Condensed income statement
c. Condensed statement showing either (i) all changes in equity or (ii) changes in
equity other than those arising from capital transactions with owners and
distributions to owners
d. Condensed cash flow statement; and
e. Selected explanatory notes

General Guidelines of Interim Financial Reporting

a. Revenues from products sold or services rendered are generally recognized for interim
reports on the same basis as for the annual period.

b. Expenses associated directly with revenue are matched against revenue in those
interim periods in which the related revenue is recognized.

c. Expenses not associated with revenue are recognized in the interim periods as incurred
or allocated over the interim periods benefited.

d. Inventories are measured for interim financial reporting by the same principles as at
financial year-end. However full inventory taking may not be required at interim dates
although it must be done at financial year-end. It may be sufficient to make estimates at
interim dates based on sales margin.

e. Inventory losses from permanent market declines are recognized in the interim period in
which the decline occurs. Recoveries of such losses on the same inventory in later interim
period should be recognized as gains in later interim periods.

f. Temporary market declines on inventories and recoveries at a later interim period are now
recognized for interim purposes.

g. Interim period income tax expense should reflect the same general principles of income
tax accounting applicable to annual reporting.

h. Gains or losses from, disposal of property, gains or losses from sale of discontinued
operations and other gains and losses should not be allocated over the interim periods.