In the annual report of a listed entity, we sometimes see term like “ discontinued operation” and Contingencies This article explains the aforesaid terms
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DISCONTINUED OPERATION
- A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held for sale and
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(a)
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Represents a separate major line of business or geographical area of operations; or
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(b)
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Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
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Is a subsidiary acquired exclusively with a view to resale
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Results and cash flows attributable to a discontinued operation needs to be disclosed separately from the continuing operations
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CONTINGENCIES
- 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.
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- It is important to note that Contingent liabilities and assets are not recognized on the balance sheet of the Company or Group.
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