In Management Recruiters' financial statements, how are the assets and liabilities of a discontinued operation held for sale measured?

According to Management Recruiters' 2024 Franchise Disclosure Document, company-owned offices that have been disposed of by sale, disposed of other than by sale, or are classified as held-for-sale are reported separately as discontinued operations. This also applies to newly acquired businesses that meet the held-for-sale criteria upon acquisition. The financial impact of these discontinued operations, including assets, liabilities, operating results, and cash flows, are presented separately from Management Recruiters' continuing operations in the consolidated financial statements and footnotes. This provides transparency into the performance of ongoing business activities versus those being discontinued.

For accounting purposes, the assets and liabilities of a discontinued operation that are classified as held-for-sale are measured at the lower of their carrying value or their fair value less the cost to sell. The carrying value represents the historical cost of the asset less any accumulated depreciation or amortization. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, less any costs directly associated with the sale, such as brokerage commissions, legal fees, and advertising expenses.

This measurement approach ensures that the financial statements of Management Recruiters reflect a realistic valuation of assets and liabilities held for sale, preventing overstatement of their value. By using the lower of carrying value or fair value less cost to sell, Management Recruiters recognizes any potential losses on the sale of these assets in a timely manner. This accounting treatment provides investors and prospective franchisees with a more accurate view of the company's financial position and performance, specifically regarding discontinued operations.