1 The objective of this IFRS is to specify the accounting for assets held for sale, and the presentation and disclosure of discontinued operations. In particular, the IFRS requires:
- assets that meet the criteria to be classified as held for sale to be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets to cease; and
- assets that meet the criteria to be classified as held for sale to
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Classification of non-current assets (or disposal groups) as held for sale or as held for distribution to owners
6 An entity shall classify a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use.
7 For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and … Continue reading
Measurement of non-current assets (or disposal groups) classified as held for sale
Measurement of a non-current asset (or disposal group)
15 An entity shall
15A An entity shall measure a non-current asset (or disposal group) classified as held for distribution to owners at the lower of its carrying amount and … Continue reading
30 An entity shall present and disclose information that enables
Presenting discontinued operations
31 A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. In other words, a component of an entity will have been a cash-generating unit … Continue reading
Appendix B Application supplement
This appendix is an integral part of the IFRS.
Extension of the period required to complete a sale
B1 As noted in paragraph 9, an extension of the period required to complete a sale does not preclude an asset (or disposal group) from being classified as held for sale if the delay is caused by events or circumstances beyond the entity’s control and there is sufficient evidence that the entity remains committed to its plan to … Continue reading
Guidance on implementing IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
This guidance accompanies, but is not part of, IFRS 5.
Availability for immediate sale (paragraph 7)
To qualify for classification as held for sale, a non-current asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) (paragraph 7). A non-current asset (or disposal group) is available … Continue reading
Completion of sale expected within one year (paragraph 8)
To qualify for classification as held for sale, the sale of a non-current asset (or disposal group) must be highly probable (paragraph 7), and transfer of the asset (or disposal group) must be expected to qualify for recognition as a completed sale within one year (paragraph 8). That criterion would not be met if, for example:
an entity that is a commercial leasing and finance company is holding for
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Exceptions to the criterion in paragraph 8
An exception to the one-year requirement in paragraph 8 applies in limited situations in which the period required to complete the sale of a non-current asset (or disposal group) will be (or has been) extended by events or circumstances beyond an entity’s control and specified conditions are met (paragraphs 9 and B1). Examples 5–7 illustrate those situations
An entity in the … Continue reading
Determining whether an asset has been abandoned
Paragraphs 13 and 14 of the IFRS specify requirements for when assets are to be treated as abandoned. Example 8 illustrates when an asset has not been abandoned.
An entity ceases to use a manufacturing plant because demand for its product has declined. However, the plant is maintained in workable condition and it is expected that it will be brought back into use if demand picks up. The plant is not … Continue reading
Presenting a discontinued operation that has been abandoned
Paragraph 13 of the IFRS prohibits assets that will be abandoned from being classified as held for sale. However, if the assets to be abandoned are a major line of business or geographical area of operations, they are reported in discontinued operations at the date at which they are abandoned. Example 9 illustrates this.
In October 20X5 an entity decides to abandon all of its cotton mills, which constitute a … Continue reading