Classification of Prior Period Operations :
This illustration does not form part of the Accounting Standard. Its purpose is to illustrate the application of the Accounting Standard to assist in clarifying its meaning.
Facts
l. Paragraph 34 requires that comparative information for prior periods that is presented in financial statements prepared after the initial disclosure event be restated to segregate assets, liabilities, revenue, expenses, and cash flows of continuing and discontinuing operations in a manner similar to that required by paragraphs 20, 23, 26, 28, 29, 31 and 32.
2. Consider following facts:
(a) Operations A, B, C, and D were all continuing in years 1 and 2;
(b) Operation D is approved and announced for disposal in year 3 but actually disposed of in year 4;
(c) Operation B is discontinued in year 4 (approved and announced for disposal and actually disposed of) and operation E is acquired; and
(d) Operation F is acquired in year 5.
3. The following table illustrates the classification of continuing and discontinuing operations in years 3 to 5:
| FINANCIAL STATEMENTS FOR YEAR 3
(Approved and Published early in Year 4) |
|||
| Year 2 Comparatives | Year 3 | ||
| Continuing | Discontinuing | Continuing | Discontinuing |
| A | A | ||
| B | B | ||
| C | C | ||
| D | D | ||
|
FINANCIAL STATEMENTS FOR YEAR 4 (Approved and Published early in Year 5) |
|||
|
Year 3 Comparatives |
Year 4 |
||
|
Continuing |
Discontinuing | Continuing | Discontinuing |
| A |
A |
||
|
|
B |
|
B |
|
C |
C |
||
|
D |
D |
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|
E |
|||
|
FINANCIAL STATEMENTS FOR YEAR 5 (Approved and Published early in Year6) |
|||
|
Year 4 Comparatives |
Year 5 |
||
|
Continuing |
Discontinuing | Continuing | Discontinuing |
|
A |
|
A |
|
|
|
B |
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|
C |
|
C |
|
|
D |
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|
E |
|
E |
|
|
|
F |
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4. If, for whatever reason, five-year comparative financial statements were prepared in year 5, the classification of continuing and discontinuing operations would be as follows:
|
FINANCIAL STATEMENTS FOR YEAR 5 |
|||||||||
|
Year 1 Comparatives |
Year 2 Comparatives | Year 3
Comparatives |
Year 4Comparatives | Year5 Comparatives | |||||
|
Cont. |
Disc |
Cont. |
Disc | Cont. | Disc | Cont. | Disc | Cont. |
Disc |
|
A |
A | A | A | A | |||||
|
B |
B |
B |
B |
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|
C |
C | C | C |
C |
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|
D |
D | D |
D |
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|
E |
E |
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|
F |
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