IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations Flashcards
Classification criteria for Non-current Assets Held for Sale and Discontinued Operations
An asset (or disposal group) is classified as held for sale when:
-Management is committed to a plan to sell the asset.
-The asset is available for immediate sale in its current condition.
-There is an active program to locate a buyer and complete the sale.
-The sale is highly probable (expected within 12 months).
-The asset is being actively marketed at a price reasonable compared to its fair value.
-Changes to the plan are unlikely.
Measurement rule for Non-current Assets Held for Sale and Discontinued Operations
Lower of carrying amount or fair value less costs to sell.
If the fair value less cost to sell is lower than the carrying amount, we must recognise an impairment loss.
Depreciation for Non-current Assets Held for Sale and Discontinued Operations
Once an asset is classified as held for sale, depreciation stops because it is no longer being used in operations.
Presentation in Financial Statements for Non-current Assets Held for Sale and Discontinued Operations
Balance Sheet:
Assets held for sale are classified as current assets (even if they are non-current in nature).
Liabilities directly associated with the asset are shown separately as current liabilities.
Income Statement:
If the asset is part of a discontinued operation, its results are shown separately as discontinued operations.
Reclassification for Non-current Assets Held for Sale and Discontinued Operations
If the asset no longer meets the held-for-sale criteria, it is reclassified as a non-current asset at its original carrying amount, adjusted for depreciation as if it had never been classified as held for sale.
