IFRS15 Non-Current Assets Held For Sale And Didcontinued Operations

Question 1

What is IFRS 5?

Answer 1

The objective of IFRS 5 is to :
establish principles for reporting information about discontinued operations
users are able to better assess the future performance /cash flows of the entity
Discontinued operation is component of an enterprise that either has been disposed of or is classified as held for sale
and
represents a separate major line of business or geographical area of operations / is a subsidiary acquired exclusively with a view to resale

A disposal in the context of IFRS 5 will therefore cover a component that has either been sold or closed with the plan to sell

Question 2

How do you recognise IFRS5?

Answer 2

Recognition either:
On date the operation has actually been disposed of
or
When the operation meets criteria as ‘held for sale’
Available for immediate sale in its present condition
Sale is highly probable
Reasonable price set
Sale expected to be completed within a year

All criteria must be met if the noncurrent asset is to be held for sale i.e. able to sell immediately in present condition /active management decision to sell

Question 3

How do you measure the value of NCA?

Answer 3

Measurement of assets based on lower of:
Carrying amount
Or
Fair value less costs of disposal (selling costs)

Non current assets ‘held for sale’ not depreciated
If value of the asset held for sale is less than the carrying value on SOFP write down and impairment charged to income statement reducing profit

Question 4

How do you present and disclose NCA’s held for resale?

Answer 4

Non-current assets held for resale
Separate disclosure of assets just below current asset section
Discontinuing operations/ Discontinued operations
Statement of profit or loss – single figure on face of statement for total of:
Profit after tax
Gain or loss on disposal of assets
Gain or loss arising from adjustment in value from carrying value to fair value
Detailed analysis on face or in notes to statement of profit or loss to include –revenues/ expenses/ profit/loss before tax / income tax/ related tax/ gain or loss arising from adjustment in value from carrying value to fair value/ gain or loss on disposal of assets.
Disclosure in Statement of Cash Flows of net cash flows from operating, investing and financing activities + detailed description
Disclosure can be minimum or maximum