Non-current assets held for sale and discontinued operations Flashcards
Classification as held for sale
An 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
the following conditions must apply:
the asset ‘must be available for immediate sale in its present
condition’
the sale must be highly probable, meaning that:
– management are ‘committed to a plan to sell the asset’
– there is an ‘active programme to locate a buyer’, and
– the asset is being ‘actively marketed at a price that is reasonable’
the sale is expected to be completed ‘within one year from the date of classification’ as held for sale
‘it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn’
Non-current assets that qualify as held for sale should be measured at the lower of:
their carrying amount and
fair value less costs to sell.
Held for sale non-current assets should be:
presented separately on the face of the statement of financial position under current assets
not depreciated.
A discontinued operation is a
component of an entity that has either been
disposed of, or is classified as held for sale
An entity must disclose a single amount on the face of the statement of profit or
loss, ‘comprising the total of:
the post-tax profit or loss of discontinued operations, and
the post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets constituting the discontinued operation
An analysis of this single amount must be presented, either in the notes or on the face of the statement of profit or loss.
The analysis must disclose:
‘the revenue, expenses and pre-tax profit or loss of discontinued operations
the related income tax expense
the gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets constituting the discontinued operation
