ACCA Strategic Business Reporting (SBR) Practice Exam

What is specifically disclosed for discontinued operations in financial statements?

1. The tax revenue generated from discontinued operations

2. Post-tax profit or loss and post-tax gain or loss on disposal

3. Estimates of future cash flow from discontinued operations

4. The assets currently held by the discontinued operations

The correct answer is: Post-tax profit or loss and post-tax gain or loss on disposal

Discontinued operations are a crucial aspect of financial reporting, particularly because they signify a segment of a business that has been disposed of or is classified as held for sale. When it comes to the financial statements, the key disclosure related to discontinued operations includes the post-tax profit or loss from those operations and post-tax gain or loss on disposal. When a company discontinues an operation, it is important for investors and stakeholders to understand the financial impact of that decision. The disclosure of the post-tax profit or loss provides insight into how much the discontinued operation contributed to the overall profitability of the company while it was operational. Similarly, the post-tax gain or loss on disposal reveals any financial consequences resulting from the sale or disposal of the operation. This information is relevant for a complete understanding of the company's financial performance and aids in evaluating ongoing business segments. In contrast, other choices do not accurately reflect the specific disclosures required for discontinued operations. For instance, tax revenue generated from discontinued operations is not typically disclosed separately as part of the core results of discontinued operations. Estimates of future cash flows from discontinued operations are not required in the financial statements because they relate to forecasts rather than actual results. Lastly, while the assets currently held by discontinued operations might be reported in the balance sheet