Topic 9- NCA Held for sale and discontinued operations Flashcards
IFRS 5 NCA held for sale and discontinued operations
what is the IFRS 5 objective
The objective of IFRS 5 is to specify the accounting for assets held for sale and the presentation and disclosure of discontinued operations.
what is the criteria that must be met in order for it to meet assets held for sale
An asset is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use.
For this to be the case the asset must be available for immediate sale and its sale highly probable i.e:
▪ Management commitment to the sale
▪ Available for immediate sale in its present condition
▪ Actively marketed i.e. advertised
▪ Sale is highly probable- i.e. offered at a reasonable price
▪ Sale must be expected to complete with one year
what steps must be be completed once it’s been decided that an asset will be held for sale
1) NCA shoud be held at lower of
- -Carrying Value
- -Fair value less costs to sell
2) NCA is moved to CURRENT Asset (selling less than a year)
3) No depreciation is charged
what is discoutinued operation
3 criteria
A component of an entity 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 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
what is key difference in the presentation of dicontinued operation
An enterprise 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.
the statement of PL will be separated out into continuing operations and discontinued operations
how is IFRS 5 NCA held for sale and discontinued op shown in consolidated FS
If a subsidiary is classified as held for sale
present their income + exp in line with IFRS 51
As a separate heading in P/L Under “Discontinued operations”
- Profit for the period from discontinued operations
- Total profit for the period
NCA held for sale shoud be held at WHAT
NCA held for sale shoud be held at lower of
- -Carrying Value
- -Fair value less costs to sell
when an asset is held for sale, the NCA should be held at lower of
- -Carrying Value
- -Fair value less costs to sell
BUT what do you have to do if it is held under the revaluation model
If the asset is held under the Revaluation model, the asset must be revalued to it’s FV initially
when a NCA is measured under the fair value method, when it is to be disposed of, it must be revaluted to FV initially before it is moved to CA
when there are gains or losses how are they dealt with?
Losses are recognised on reclassification but NOT on gains
what are dis-continued assets measured at
NCA shoud be held at lower of
- -Carrying Value
- -Fair value less costs to sell
