Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015

Chapter 9Assets Held for Sale and Discontinued Operations

1. Introduction
2. Major Disposals of Assets
3. Asset Impairment
4. Discontinued Operations
5. Restatement of Comparatives

Introduction

Companies will often make the decision to sell assets that they have on their balance sheets (statements of financial position). In addition, they may also make the decision to dispose of part of their business that constitutes a separate operation. For example, a supermarket may well have different trading arms, such as groceries, domestic appliances, credit cards and banking, and mobile telephones. The supermarket may decide to close, say, the domestic appliances division because of poor performance, which may give rise to a discontinued operation for the entity.

When the company makes the decision to sell an asset it may choose to sell one single asset in its entirety or sell a group of assets, which are often referred to as a ‘disposal group’.

This chapter examines the issue of assets held for sale and discontinued operations. It closely interrelates with Section 17 Property, Plant and Equipment (covered in Chapter 13) and Section 27 Impairment of Assets (covered in Chapter 15). Section 5 Statement of Comprehensive Income and Income Statement is also particularly relevant in the context of discontinued operations, particularly the Appendix to Section 5, which gives an example showing the presentation of discontinued operations in the statement of comprehensive income/income statement.

Major ...