Discontinued Operation & Contingencies

May 27th, 2008 Comments off
Share |

In the annual report of a listed entity, we sometimes see term like “ discontinued operation”  and Contingencies This article explains the aforesaid terms 




  • A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held for sale and



  Represents a separate major line of business or geographical area of operations; or


  Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or


 Is a subsidiary acquired exclusively with a view to resale


  Results and cash flows attributable to a discontinued operation  needs to be disclosed separately from the continuing operations





  • A contingent liability or asset is a POSSIBLE obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Company or the Group of Companies.



  • It is important to note that Contingent liabilities and assets are not recognized on the balance sheet of the Company or Group.


Comments are closed now.

Financial Accounting


Advertise Here | Brain Teasers/Puzzles | Greeting Cards | Inspirational Quotes | Jokes/Humor | Useful Links | Motivational Stories | Resource | Shopping | Share/Express Your Views | Testimonials | Universities/Colleges | Words of Wisdom from Religions | FREE POSTING OF ACCOUNTING & FINANCE JOBS VACANCY|