Question

Envoy Co. manufactures and sells household products. Envoy experienced losses associated with its small appliance group. The small appliance group represents a major line of Envoy’s business. Envoy plans to sell the small appliance group with its operations. What is the earliest point at which Envoy should report the small appliance group as a discontinued operation?

Answer 1

Answer:

Since it is case in Envoy that the small alliance group is a distinguishable separate business, the reporting as discontinued operation can be done in the current year

Explanation:

The small appliance group represents a major line of Envoy’s that is planned for sale with its operations, the earliest point at which Envoy should report the small appliance group as a discontinued operation is the same year it was decided that the operations of the small appliance group will be discontinued.

The conditions stated under the International Financial Reporting Standard is that ''First, the asset or business component must be disposed of or reported as being held for sale. Second, the component must be distinguishable as a separate business that is being removed from operation intentionally''

Since it is case in Envoy that the small alliance group is a distinguishable separate business, the reporting as discontinued operation can be done in the current year