LECTURE TOPIC 11
MFRS 5: NON-CURRENT ASSETS HELD FOR
SALE AND DISCONTINUED OPERATION
Objectives MFRS 5 :
INTRODUCTION
1. is to specify the accounting for assets held for sale
2. the presentation and disclosure of discontinued
operations.
ASSETS HELD FOR SALE
CLASSIFICATION
Non-Current Assets/Disposal Groups = Held for Sale recovered through a sales
Available for sale in the present condition
Sale is highly probable
Management is committed to planning for the sale
Active program to locate the buyer-initiated
Assets are marketed at a reasonable price.
Within one year
ASSETS HELD FOR SALE –
MEASUREMENT
DO NOT APPLY TO
Deferred tax assets (MFRS Investment property at FV
112) model (MFRS 140)
Assets for employee Non – Current Assets at FV -
benefits (MFRS 119) cost of sales (MFRS 141)
Financial assets (MFRS 9) Contractual rights insurance
contract ( MFRS 14)
Main principles: LOWER OF
Carrying Amount Fair Value less Cost to Sale
(fair value less cost to distribute)
ASSETS HELD FOR SALE –
MEASUREMENT
HOW ???
BEFORE AFTER
CLASSIFICATIONS CLASSIFICATIONS
Asset’s Measurement In line with the applicable IFRS Lower of CA and FV – costs to sales
Impairment In line with the applicable IFRS Adjusted CA and FV – costs to sales
In P/L (or OCI if applicable) Always P/L
Do not charge any depreciation
DISCONTINUED OPERATIONS
Component of an entity that:
Cash
Generating Unit
has been disposed of or
is classified as held for sale
AND
Separate major line of business / geographical area
Is part of a plan to dispose of it, or
Is subsidiary acquired to resale
An entity shall classify a non-current asset (or
disposal group) as held for sale if its carrying
amount will be recovered principally through a
sale transaction rather than through continuing
INTRODUCTION
use.
the asset (or disposal group) must be available
for immediate sale in its present condition
subject only to terms that are usual and
customary for sales of such assets (or disposal
groups) and its sale must be highly probable.
To be highly probable
the appropriate level of management must be
committed to a plan to sell the asset (or disposal
group)
an active program to locate a buyer and complete the
CONTINUE plan must have been initiated.
the asset (or disposal group) must be actively
marketed for sale at a price that is reasonable in
relation to its current fair value.
Sale should be expected to qualify for recognition as
a completed sale within one year from the date of
classification
An entity shall measure a non-current asset (or
disposal group) classified as held for sale at the
lower of it’s carrying amount and fair value less
costs to sell.
MEASUREMENT An entity shall measure a non-current asset (or
disposal group) classified as held for distribution
to owners at the lower of it’s carrying amount and
fair value less costs to distribute.
CONTINUE
Initial measurement: Subsequent measurement:
initial recognition at the lower of its sale is expected to occur beyond one year,
carrying amount had it not been so the entity shall measure the costs to sell at
classified (for example, cost) and fair value their present value.
less costs to sell. Any increase in the present value of the
if the asset (or disposal group) is acquired costs to sell that arises from the passage of
as part of a business combination, it shall time shall be presented in profit or loss as a
be measured at fair value less costs to sell. financing cost
RECOGNITION OF IMPAIRMENT
LOSSES AND REVERSALS
An entity shall recognise an impairment loss for any initial or
subsequent write-down of the asset (or disposal group) to fair value
less costs to sell, to the extent that it has not been recognised
An entity shall recognise a gain for any subsequent increase in fair
value less costs to sell of an asset, but not more than the cumulative
impairment loss that has been recognised either in accordance with
this MFRS or previously in accordance with MFRS 136 Impairment
of Assets.
The entity shall measure a non-current asset (or
disposal group) that ceases to be classified as held for
sale or as held for distribution to owners at the lower
CHANGES TO
of:
it carrying amount before the asset (or disposal
A PLAN OF group) was classified as held for sale or as held for
SALE OR TO A distribution to owners, adjusted for any
PLAN OF
depreciation, amortization, or revaluations that
would have been recognized had the asset (or
DISTRIBUTION disposal group) not been classified as held for sale
TO OWNERS or as held for distribution to owners, and
its recoverable amount at the date of the subsequent
decision not to sell or distribute
An entity shall present and disclose information
PRESENTATION that enables users of the financial statements to
AND evaluate the financial effects of discontinued
DISCLOSURE operations and disposals of non-current assets (or
disposal groups)
PRESENTATION: DISCONTINUED
OPERATIONS
Statement of • Single Amount
• Post-tax P/L of discontinued operations
Comprehensive • Post-tax gain/loss on the measurement or disposal
• Analysis of the single amount in the notes or the statement of CI
Income
• Net cash flows attributable to the operating, investing, and
Statement of investing activities on the discontinued operations
• Can be presented in the notes
Cashflows
• Present separately on the face of statement of FP
Statement of • Assets classified held for sale
• Assets and liabilities in the disposal group classified as held for
Financial Position sale.
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