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

Question 1

Discontinued operations (IFRS)

Answer 1

• A component of an entity where its operations and cash flows can be clearly distinguished operationally and for financial reporting purposes, from the rest of the entity and it has been disposed of or classified as held for sale
• Report results of discontinued operations on the statement of comprehensive income for current and prior periods, net of tax, segregated as follows:
  o the post-tax profit or loss of discontinued operations
  o the post-tax gain or loss recognized on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation.

Reference: IFRS 5.03, .31 - .33

Question 2

Assets held for sale (IFRS)

Answer 2

• Non-current assets (or disposal group) to be disposed of other than by sale should continue to be classified as held and used until they are disposed of
• Non-current assets (or disposal group) to be sold should be classified as held for sale when all of the following are met:
  o Management commits to a plan to sell
  o Steps to locate a buyer and complete the sale have started
  o It is being actively marketed at a reasonable price
  o It is available for immediate sale in its present condition
  o The sale is probable and expected to occur within a year
  o Actions required to complete the sale indicate it’s unlikely significant changes to the plan will be made or that the plan will be withdrawn
• Non-current assets (or disposal group) held for sale should be measured at lower of carrying amount and fair value less costs to sell, and should not be amortized

Reference: IFRS 5.06 - .15, .25