With respect to a discontinuing operation, the initial disclosure event is the occurrence of one of the following, whichever occurs earlier:
- The enterprise has entered into a binding sale agreement for substantially all of the assets attributable to the discontinuing operation or
- The enterprise’s board of directors or similar governing body has both
(i) approved a detailed, formal plan for the discontinuance and (ii) made an announcement of the plan.
A detailed, formal plan for the discontinuance normally includes:
- identification of the major assets to be disposed of;
- the expected method of disposal;
- the period expected to be required for completion of the disposal;
- the principal locations affected;
- the location, function, and approximate number or employees who will be compensated for terminating their services; and
- the estimated proceeds or salvage to be realised by disposal.
An enterprise’s board of directors or similar governing body is considered to have made the announcement of a detailed, formal plan for discontinuance, if it has announced the main features of the plan to those affected by it, such as, lenders, stock exchanges, creditors, trade unions, etc, in a sufficiently specific manner so as to make the enterprise demonstrably committed to the discontinuance.
