Discontinued operation - IFRS 5

[AQS]

Hi Marek,

I need some help to clarify my understanding regarding discontinued operation.

We only have two revenue streams "A" & "B" (both contributing approx 50% each), we can further dissect "B" into say B1 & B2.
We have an intangible asset (s/w) which we use to generate revenue for revenue stream "A" primarily & very little for "B1 & B2" as well (say 5%) and "B1 & B2" has it's own direct cost otherwise.
Now we are looking to replace revenue stream "A" with "C" while continue using the same Intangible asset for "C".
Please note we have not being presenting these streams as operating segment previously, although CODM use to review both revenue streams separately (since the direct cost for revenue stream "A" is minimal so no separate cost review involved).

My question is, do we need to present revenue stream "A" as discontinued operation? Please note we have been using whole entity as CGU for impairment testing in the
past.

My understanding is that it's a discontinuation of a product & not of an operating segment.

Thanks

[Marek Muc]

Hi, it boils down to a question whether the operations with respect to product A are a component of an entity. Why do you believe these operations are not a separate CGU?

[AQS]

Hi Marek,

We operates as a single CGU, since the Company’s cash flows are considered linked to value proposition of our s/w as a whole. Although certain cash flows can be tied to product A, a significant portion of operating resources and cash flows relate to various products and our entire s/w. As a result, it is not feasible to discretely allocate our operations and cash flows to individual products.

Further, from a financial reporting perspective, we do not generate discrete financial information on expenditures at any lower level of disaggregation than a consolidated basis. Given our nature as a s/w based company, many of our costs are also not discrete in nature as they relate to the s/w products as a whole.

Moreover is it possible that we don’t present any asset as held for sale & only present discontinued operation in PL.

Thanks

[Marek Muc]

So it seems to me that this is not a discontinued operation to be presented separately in P/L, but rather replacing an old/obscure product with a new one. Does this sound right given the economics of this switch? You wrote that the major assets will still be used, so they are definitely not to be classified as held for sale.