Umar Saeed ACCA, M.

COM

IFRS 5
Non-current Assets Held for Sale and Discontinued Operations
 NCA converts to CA
 Depreciation ceases
 Recorded at lower off C.A or F.V less cost to sell

NCA Held for sale

A current asset that was previously a noncurrent asset and of which it is decided now that its
recoverable amount will be recovered through an immediate sale.

Disposal Group
A group of assets and liabilities intended to sale e.g.
 CGU
 Subsidiary
 Bulk

Discontinued Operations
Disposal Group either disposed of or classified as held for sale.
Same rules applied as of NCA held for sale.

CONDITIONS FOR CLASSIFICATION (Must be met at reporting date)

 Immediately available for sale in present condition
 Sale is highly probable i.e.
o Management is committed
o Active program to locate a buyer
o Asset marketed at a reasonable price
o Sale is expected within one year

ENTRY TO IFRS 5
IAS 16 IAS 36 IFRS 5

INITIAL RECOGNITION
Lower off:
 C.A
 F.V less cost to sell

SUBSEQUENT MEASUREMENT
Subsequent measurement arises when there is a delay in sale. If delay is beyond entity’s control
then it is allowed to be presented as a current asset under IFRS 5
 F.V less cost to sell @ each year end (P.V of cost to sell to be deducted)
 Gain/loss to PnL (Gain limited to previously made loss only)
 Umar Saeed ACCA, M.COM

DISCONTINUED OPERATIONS PRESENTATION

 If sold,
o In PnL, Profit from Continued and Discontinued Operations separately
 If unsold,
o In PnL, Profit from Continued and Discontinued Operations separately
o In Balance Sheet, Disposal Group Assets and Liabilities held for sale separately
presented under Assets and Liabilities respectively

CHANGE IN PLAN
 Change in plan is a retrospective event under IAS 8
 Interim and Quarterly financials need to be revised
 If one year passed, adjust last year as well

Recorded at lower off:

 Adjusted C.A
 Recoverable amount

Any Gain/loss to PnL

NCA HELD FOR DISTRIBUTION

 If non-current asset is held for free distribution
 Same rules and conditions applied

AUDIT PROCEDURES
 Ensure assets held for sales are recalculated to lower of carrying amount and FV less costs
to sell and classified separately
 Inquiry/obtain written representation from management concerning intentions to sale
 Review board minutes for evidence of plan to sale
 Review any contracts negotiated/sale particulars
 Compare sale price to FV – ensure amount held in B/S is appropriate.
 Ensure likelihood of transaction completion within 1 year
 Subsequent events review