NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (IFRS 5) Flashcards
What is the scope of IFRS 5?
Applies to all recognised non-current assets and disposal groups of an entity that are:
* held for sale; or
* held for distribution to owners.
When assets classified as non-current shall be reclassified as current assets?
When they meet the criteria of IFRS 5
If an entity disposes of a group of assets (CGU), together in a single transaction, and a non-current asset in the group meets the measurement requirements in IFRS 5, how is measured the enitre group? What IFRS principle is applied?
If a non-current asset in the group meets the measurement requirements in IFRS 5, then IFRS 5 applies to the group as whole.
The entire group is measured at the lower of its carrying amount and fair value less cost to sell.
Can non-current assets to be abbandoned be classified as held for sale?
No
What is a Discontinued operation? (definition)
A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale and either:
* Represents a separate major line of business or geographical area
* 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.
Where are presented the result of discontinued operations?
Results of discontinued operations are presented as a single amount in the statement of comprehensive income.
An analysis of the single amount is presented in the notes or in the statement of comprehensive income.
When a non-current asset is classified as held for sale? Which criteria have to be met?
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.
Certain criteria have to be met:
* The asset (or disposal group) is available for immediate sale
* The terms of asset sale must be usual and customary for sales of such assets
* The sale must be highly probable
* Management is committed to a plan to sell the asset
* Asset must be actively marketed for a sale at a reasonable price in relation to its current fair value
* Sale should be completed within one year from classification date
How should an entity classify a non-current asset acquired only with a view to its subsequent disposal?
It shall classify the non-current asset as held for sale at the acquisition date, only if the one year requirement is met.
How is measured carrying amount of assets included in the scope of IFRS 5?
Carrying amount of assets classified as held for sale is measured in accordance with applicable IFRSs.
How are measured the assets after classification as held for sale?
They are measured at the lower of:
- carrying amount
- fair value less cost to sell
Are assets included in the scope of IFRS 5 tested for impairment?
Yes, Impairment must be considered at the time of classification as held for sale and subsequently.
How is recognised the subsequent increase in fair value of assets classified as held for sale?
Subsequent increases in fair value cannot be recognised in profit or loss in excess of the cumulative impairment losses that have been recognised with this IFRS or with IAS 36 Impairment of Assets.
Are non-current assets (or disposal groups) classified as held for sale depreciated?
No
Where are disclosed non-current assets held for sale?
Non-current assets (or a disposal group) held for sale are disclosed separately from other assets in the statement of financial position.
