DISCONTINUED OPERATION (PFRS 5)

A 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.
c.) Is a subsidiary acquired exclusively with a view to resale.

A component of an entity masy be a subsidiary, a major division of business or geopraphical segment whose operations
and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the
entity.
The component can be clearly distinguished oprationally and for financial reporting purposes if its assets and liabilities
and its revenues and expenses are directly attributable to the component, meaning would be eliminated when the
component is disposed of.

Actually, discontinued operations occur if the following happens:

a.) A company eliminated (or will eliminate) the results of the operations and cash flows of a component of an entity
from its on-going operations.
b.) There is no significant continuing involvement in that component after its disposal.

WHEN TO CLASSIFY A COMPONENT AS DISCONTINUED OPERATION?

Discontinued operations occur at the EARLIER of the (1) date the component is actually disposed of and (2) the
date the criteria for classification as held for sale are met.

SCENARIO WHICH ARE NOT DISCONTINUED OPERATION

1. Phasing out a product line within a product group.
2. Shifting of production from one location to another.
3. Closing of a facility, factory or branch to achieve productivity improvement or other cost savings.

RESULTS OF OPERATIONS OF DISCONTINUED OPERATIONS

If a component of an entity qualified as a discontinued operation during the year, all of its results of operations, before
and after the classification, are classified as discontinued operations.

The financial statements in the prior period are restated so that the information presented relate to all operations that
have been discontinued as of the reporting period for the latest period.
The entity shall present the results of operations of discontinued operations, NET OF TAX, on the face of the statement
of comprehensive income.

The income of loss from discontinued operations has the following components:
a.) the amount of revenue, expenses, income or loss attributable to the discontinued operation during the current
period and the related income tax.
b.) Any impairment loss
c.) Any gain or loss from the actual disposal of the assets and settlement of the liabilities of a discontinued operation.
d.) The termination cost of employees and other costs which are directly incurrent as a result of the discontinuance are
reported as part of discontinued operations.

SOLUTION GUIDE
Net income of loss (before and after reclassification during the year) P xxx (xxx)
Impairment loss (xxx)
Gains or loss on disposal xxx (xxx)
Direct costs (pension, termination costs, etc.) (xxx)
Income or loss from discontinued operations P xxx (xxx)
Multiply by: (1 - tax rate) xx%
Income or loss from discontinued operations, NET OF TAX P xxx (xxx)
PRESENTATION
INCOME STATEMENT
As single line item "Income (Loss) from Discontinued Operations" , net of tax is presented after income or loss from
continuing operations.
Note: A Noncurrent Asset Held for Sale or disposal group held for sale that is NOT a component of an entity is
presented within CONTINUING OPERATIONS.

BALANCE SHEET
PFRS 5 provides that an entity shall also present separately on the face of the statement of financial position the
following information:
a.) Assets of the component held for sale separately from all other assets.
b.) Assets of the component held for sale are measured at the lower of the CA and FVLCTS
c.) Liabilities of the component held for sale separately from all other liabilities.
d.) Noncurrent assets of the component held for sale shall not be depreciated.

PFRS provides that the assets of the component classified as held for sale shall be presented as a single line item "Assets
Held for Sale" under CURRENT ASSETS and the liabilities of the component shall be presented as a single line item
"Liabilties Held for Sale" under CURRENT LIABILITIES.
The assets and liabilities of the component CANNOT BE OFFSET against each other.

Note: All events after the reporting period are NON-ADJUSTING EVENTS (disclosed only)