Discontinued operations

In this lesson

1. 0:00 Discontinued operations: definition and scope
2. 1:09 Presentation in financial statements
3. 3:31 Statement of profit and loss format
4. 5:15 Worked example: Pixel discontinued operations
5. 6:41 Disclosure and user interpretation

About this lesson

Discontinued operations are components of a business that have either been sold or are classified as held for sale, representing a major line of business or geographical area. You'll discover why they must be presented separately on the statement of profit or loss and comprehensive income, and how to disclose the detailed breakdown in the notes to the financial statements. The video walks you through the presentation requirements step by step. On the face of the statement, discontinued operations appear as a single line item showing the post-tax profit or loss, plus any remeasurement gain or loss if the operation is held for sale. A supporting note then analyses this figure to show revenue, expenses, pre-tax profit or loss, and related tax. This separation is crucial because it allows users of the financial statements—particularly investors and creditors—to distinguish between profits from continuing operations (what's likely to continue next year) and one-off losses from discontinued activities. You'll work through a practical example involving a company with operations in two regions, one of which is being closed. The worked solution demonstrates how to extract the discontinued operation's trading results, calculate the loss on disposal and redundancy costs, and present the final figures clearly. By separating the £85,000 loss from discontinued operations from the £75,000 profit from continuing operations, stakeholders can see the true underlying performance of the business and make more informed decisions about its future prospects.

Duration: 8m