A few years ago, when load shedding just started, White Lines Limited started a Rechargeable Bulbs Division, that, as the name suggests, manufactured rechargeable bulbs. The Rechargeable Bulbs Division has been seen as a major line of business for the company, with its own factory which operates independently and maintains independent financial records.

In recent years the competition in the rechargeable bulbs industry has become more competitive and upon further investigation, it was found that the Rechargeable Bulbs Division was no longer economical and that if White Lines Limited wanted, they could buy rechargeable bulbs from external parties and sell them at a price lower than what it costs to manufacture.

For this reason, the directors formally decided to discontinue the Rechargeable Bulbs Division and sell the factory. This decision was made and a disposal plan was approved on 1 February 2023. White Lines Limited also made a public announcement on 1 February 2023 to announce this decision.

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The assets and liabilities of the factory operations were classified as a disposal group on 1 February 2023, seeing as it was ready for immediate sale in its current condition and management was confident that the sale will be completed within one year. You can assume that all other IFRS 5 criteria for the factory to be classified as a disposal group held for sale were also met.

REQUIRED:

4.1) Advise the Financial Manager of White Lines Limited on the correct classification and presentation of the Preference shares in the financial statements of White Lines Limited for the financial year ended 31 March 2023. 

Your discussion should be in accordance with the requirements of IAS 32.

4.2) Advise the Financial Manager of White Lines Limited whether the Rechargeable Bulb Division qualifies as a discontinued operation and if so, how the discontinued operation should be presented in the 31 March 2023 financial statements. Your discussion should be in accordance with IFRS 5.