Discontinued Operations and HFS

Determining componentization

1. Can operations and cash flows be clearly distinguished

2. Determine if component is discontinued operation

Discontinued operation criteria (1 of 3)

1. Separate line of business/area

2. coordinated disposal plan

3. subsidiary acquired for re-sale

Measurement of discontinued operations and HFS

Measure at lower of CV and FV - COD and derecognize asset

• Impairment loss eligibility

• Recognize loss in NI

If FV - COD increase, write up to extent of loss taken

Presentation and disclosure of discontinued operations

NCA presented separate on B/S

Report single amount of post-tax profit/loss and gain/loss on I/S

Note disclosure required for HFS

• Description, circumstances, classification changes

HFS classification (All)

1. Asset must be available for immediate sale

2. Terms of sale must be usual or customary

3. Sale must be highly probable

   1. Mgmt committed to sale

   2. Active program to find buyer

   3. Actively marketed at reasonable price

   4. sale expected within one year (can be waived)

   5. unlikely of sig. changes to plan

HFS depreciation

Depreciation ceases once classified as HFS

Abandoned assets

Remain on the B/S as LT assets

Write down to NRV on abandonment and stop depreciating

Can be classified as HFS asset

ASPE HFS

Distributions to owners do not classify as HFS

Reversal only applies to losses after period classified as HFS

NCA HFS reported as NC until sold then become current