What characterizes discontinued operations according to IFRS 5?

Discontinued operations, as defined by IFRS 5, specifically relate to components of an entity that have been disposed of or are classified as held for sale and represent a separate major line of business. This classification is significant because it allows stakeholders to better understand the ongoing performance of the organization by distinctly identifying portions of the business that are no longer contributing to future operations.

When a component qualifies as a discontinued operation, it indicates that this part of the business is no longer integral to the ongoing operations of the company. The focus on "major line of business" emphasizes that the discontinued operations are substantial enough to have a material impact on the financial reporting. Hence, the results of these operations need to be presented separately in the financial statements to ensure transparency and clarity regarding the company's continuing and discontinued activities.

Options that suggest a minor line of business or involvement in enhancing current operations do not align with the distinct definition set by IFRS 5. Similarly, indicating that operations are simply no longer profitable misses the key requirement regarding their size and separation from the ongoing business. The criteria laid out by IFRS 5 serve to protect investors and other stakeholders by ensuring they receive a clear picture of what is left in the business post-disposal or planned disposal.