Non-Current Assets Held for Sale and Discontinued Operations

Question 1

What is the Definition of Non-Current Assets Held for Sale by the IFRS?

Answer 1

IFRS 5.6,
* Non-current asset held for sale if CA will be recovered through a sale transaction rather than continuing use.

IFRS 5.7,
* Asset available for immediate sale in present condition.

Question 2

What is the Criteria Under IFRS 5.8 for a Non-Current Asset Held for Sale?

Answer 2

• Management must be committed to plan to sell asset
• Must actively look for buyer
• Price must be reasonable
• Sale expected within a year
• Unlikely sale will be withdrawn

Question 3

How are Non-Current Assets Measured?

Answer 3

IFRS 5.15,
* Lower at sale between carrying amount, and fair value – costs to sell.
* Recognise expected loss straight away in SoPL
* Don’t increase CA, wait to recognise expected profit.

IFRS 5.18,
* Immediately before initial classification of asset held for sale, CA measured in accordance with applicable IFRSs.

IFRS 5.25,
* Entity shall not depreciate non-current asset while it is classified as “held for sale”.

Question 4

How are Non-Current Held for Sale Presented & Disclosed?

Answer 4

Presented separately from other assets in SoFP.

Disclosure:
* Description of asset
* Facts and circumstances of the sale
* Expected manner and timing of disposal
* Any loss recognised

Question 5

What is the Definition of Discontinued Operations (IFRS 5.32)?

Answer 5

A component of an entity that either has been disposed of or is classified as held for sale, and…
(a) Represents separate major line of business/geographical area of operations
(b) Part of a single co-ordinated plan to dispose of a separate major line of business/geographical area of operations
(c) Is a subsidiary acquired exclusively with a view to resale.