Under IFRS 5, how is a discontinued operation defined?

Under IFRS 5, how is a discontinued operation defined?

• A. A component of an entity that has been disposed of or is classified as held for sale
• B. A segment of the business that has ceased operations
• C. An asset that has been fully depreciated
• D. A project that is no longer planned

Answer: (A)

Under IFRS 5, a discontinued operation is identified when a component of the entity has been disposed of or is classified as held for sale. This trigger is the starting point for determining whether presenting something as a discontinued operation is appropriate, with the additional criteria (separate major line of business or geographic area, part of a coordinated plan to dispose, or a subsidiary acquired solely to be disposed of) used to decide if that disposed-of or held-for-sale component should be shown as discontinued in the financial statements. The option reflects this disposal or held-for-sale condition, which is the key criterion. The other scenarios described—ceasing operations in a segment, an asset fully depreciated, or an unplanned project—do not, by themselves, align with the IFRS 5 definition of a discontinued operation.

Under IFRS 5, a discontinued operation is identified when a component of the entity has been disposed of or is classified as held for sale. This trigger is the starting point for determining whether presenting something as a discontinued operation is appropriate, with the additional criteria (separate major line of business or geographic area, part of a coordinated plan to dispose, or a subsidiary acquired solely to be disposed of) used to decide if that disposed-of or held-for-sale component should be shown as discontinued in the financial statements. The option reflects this disposal or held-for-sale condition, which is the key criterion. The other scenarios described—ceasing operations in a segment, an asset fully depreciated, or an unplanned project—do not, by themselves, align with the IFRS 5 definition of a discontinued operation.