Final answer:
A discontinued operation is a part of an enterprise that has been sold or is being held for sale and is no longer considered a continuing part of the business. The criteria for discontinued operations reporting differ slightly between IFRS and APSE, with IFRS focusing on separate major lines of business or geographical areas and APSE providing additional context for reporting such components.
Step-by-step explanation:
A discontinued operation refers to a component of an entity that has been disposed of or is classified as held for sale and represents a separate major line of business or geographical area of operations. It can also refer to a subsidiary acquired exclusively with a view to resale.
Under IFRS (International Financial Reporting Standards), a discontinued operation is reported when a business component has been either disposed of or is classified as held for sale, and:
- It represents a separate major line of business or geographical area of operations.
- It is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations.
- It is a subsidiary acquired exclusively with a view to resale.
In the context of APB Opinion No. 30 (APSE), which has been superseded by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) in the United States, discontinued operations reporting is similar but has been further developed and refined in the ASC. Under ASC, specific criteria for reporting a component as a discontinued operation also include the requirement that the disposal represents a strategic shift that has or will have a major effect on an entity's operations and financial results.