Section 3250: Assets Held for Sale
(Section 2240: Discontinued Operations)
International Financial Reporting Standard 5
Non-current Assets Held for Sale and Discontinued Operations
1. History
IAS 35, Discontinuing Operations, June 1998
In 2004, IFRS 5 replaced IAS 35
IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, March 2004
2. Component of an entity
--> Operations and cash flows, clearly distinguishable,
from the rest of an entity, operationally and for financial reporting
3. Disposal group
A group of assets and liabilities
--> Assets to be disposed of in a single transaction as a group
--> Liabilities directly associated with those assets
4. Non-current Assets Held for Sale
A non-current asset or disposal group is classified as held for sale
--> if (a) is the case
(a) carrying amount will be recovered by a sale transaction,
--> not through continuing use
5. Non-current assets held for sale
--> are not depreciated: IFRS 5.25, ASC 360-10-35-43, SFAS 144.34
6. Non-current assets to be abandoned
--> are not classified as held for sale
7. Measurement
Non-current assets held for sale
--> are measured at the lower of (1) and (2)
(1) carrying amount
(2) fair value less costs to sell
If (1) > (2), an impairment loss is recognised
If (2) > (1), a gain is recognised,
such a gain should not be greater than
--> the cumulative impairment losses previously recognised
8. Presentation
Non-current assets held for sale
--> are presented separately from other assets
in the statement of financial position
9. Discontinued Operation, IFRS 5.32
A discontinued operation is a component of an entity that
--> either has been disposed of or
--> is classified as held for sale
--> and satisfies one of (1), (2), (3)
(1) a separate major line of business or geographical area of operations
(2) part of a single plan to dispose of (1)
(3) a subsidiary acquired exclusively for resale purpose
10. Discontinued Operation: U.S. GAAP, ASC 205-20-45-1, SFAS 144.42
A discontinued operation is a component of an entity that
--> either has been disposed of or
--> is classified as held for sale
--> and satisfies both of (1) and (2)
(1) the operations and cash flows of the component
--> eliminated from ongoing operations, as a result of disposal transaction
(2) no significant continuing involvement after disposal
11. A component of an entity, IFRS 5.31
--> is a cash-generating unit or a group of cash-generating units
12. Cash-generating Unit (CGU)
Smallest identifiable group of assets
--> the group generates cash inflows,
--> such cash inflows are largely independent of (a)
(a) cash inflows from other assets
13. Component of an Entity, U.S. GAAP, SFAS 144.41
A Component of Entity
--> is the operations and cash flows that can be clearly distinguished,
--> from the rest of the entity, operationally and for financial reporting
A Component of Entity can be
--> reportable segment, operating segment: SFAS 131
--> reporting unit: SFAS 142
--> subsidiary, asset group
14. Operating Segment, U.S. GAAP, ASC 280-10-50-1, SFAS 131.10
--> is a component of an enterprise
15. Reportable Operating Segment, U.S. GAAP, ASC 280-10-50-10, SFAS 131.16
--> is an operating segment that meets any of the quantitative thresholds:
--> 10% or more of combined revenue, combined assets
--> absolute amount of profit or loss is 10% or more of (1)
(1) = the greater of (a) or (b)
(a) combined reported profit of all segments with profit
(b) combined reported loss of all segments with loss
16. Reporting Unit, U.S. GAAP, ASC 350-20-35-36, SFAS 142.30
--> is an operating segment or a component of an operating segment
--> if the component satisfies (1) and (2)
(1) discrete financial information is available
(2) its operating results are regularly reviewed
Components with similar economic characteristics
--> are deemed as a single reporting unit
17. Discontinued Operations: Disclosures
(1) a single amount in the statement of comprehensive income
--> the total of (a) and (b)
(a) post-tax profit or loss of discontinued operations
(b) post-tax gain or loss on the disposal of discontinued operations,
on the measurement of fair value less costs to sell
(2) an analysis of the single amount above
(3) revenue, expenses and pre-tax profit or loss of discontinued operations,
(4) related income tax expense
(5) net cash flows from discontinued operations
by operating, investing, financing activities
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