IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

Question 1

Objective of IFRS5

Answer 1

• requirements for the classification, measurement and presentation of non-current assets held for sale, in particular requiring that such assets should be presented separately on the face of the statement of financial position
• updated rules for the presentation of discontinued operations, in particular requiring that the results of discontinued operations should be presented separately in the statement of profit or loss.

Question 2

Classification as held for sale

Answer 2

• and entity shall classify a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use

Question 3

Conditions for classification as held for sale

Answer 3

• must be available for immediate sale in its present condition
• the sale must be highly probable: - committed to a plan to sell the asset
  - active programme to locate a buyer
  - actively marketed at a price that is
  reasonable
• the sale is expected: within one year from the date of classification
• it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn

Question 4

Non-current assets for sale should be measured:

Answer 4

• lower than their carrying amount and fair value less costs to sell
• presented separately on the face of the statement of financial position under current assets, not depreciated

Question 5

Discontinued operation

Answer 5

• is component of an entity that has either been disposed of, or is classified as held for sale:
  - represents a separate major line of business or geographical area of operations
  - is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations
  - is a subsidiary acquired exclusively with a view to resale

Question 6

The entity must disclose a single amount on the face of the statement of profit or loss compromising the total of:

Answer 6

• the post-tax profit or loss of is continued operations
• the post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal o the assets constituting the discontinued operation

Question 7

Conditions to be classified as held for sale (trances)

Answer 7

Twelve months
Reasonable price
Available
No change in plan
Committed
Expected (highly probable)
Started