FAC 3702

2012

Non-Current Assets Held for Sale

IFRS 5

Non-Current Assets Held for Sale IFRS 5

- Introduction

- Criteria to class NCAHfS

- Extension Period

- Criteria Met after reporting period

- Measurement

- Impairment Losses + Reversals

- Disclosure

- Discontinued Operations

Non-Current Assets Held for Sale IFRS 5

• Introduction

• IAS 1 prescribes that Assets and Liabilities be

classified between current and non-current

assets

• What is the difference between current and

non-current assets

• Are NCAHfS classified as current or non-

current assets?

Non-Current Assets Held for Sale IFRS 5

requirement’s

• Non-Current Assets are classified as H4S(Held

for Sale) only if Carrying Amount is to be

recovered principally through sale.

• Are Assets acquired solely for subsequent

disposal are classified as H4S? (it depends)

Only if criteria Met

Non-Current Assets Held for Sale IFRS 5

requirement’s

• Requirements to classify

1. Asset available for sale – Immediately

2. Is the sale highly probable? i.e. Significantly More

likely than Probable. It is if :-

I. Active program to locate a buyer

II. Appropriate level of management is committed

to plan

III. Asset is actively marketed for sale

IV. Sale is expected to be completed within 1 year

Non-Current Assets Held for Sale IFRS 5

requirement’s

• Criteria Met after reporting period

• Is it an Adjusting or Non-Adjusting event?

-Non-Adjusting

• Disclose:-

I. Asset description

II. Facts and Circumstances leading to disposal manner and timing

III. Where applicable Segment IFRS 8 operating segment

Non-Current Assets Held for Sale IFRS 5Extension to period required to complete sale

• Do we still classify as NCAHfS?

I. Sufficient Evidence that entity still committed to

sale.

II. Delay – upshot of circumstances of events

beyond entity’s control

a. Which events can be beyond control of entity?

i. Date of Plan Conditions Expected to be imposed at the

date of plan by buyer resulting in delay to complete plan

ii. Date of firm commitment - unExpected conditions by the

buyer resulting in delays to complete plan

Non-Current Assets Held for Sale IFRS 5Measurement

• Excluded from IFRS 5 measurement scope :-

• IAS 12 Deferred Tax

• IAS 19 Employee Benefits Assets

• IAS 39 Financial Instruments

• IAS 40 Investment Property

• IAS 41 Agricultural

• IFRS 4 Insurance

Non-Current Assets Held for Sale IFRS 5Measurement

Steps in Measurement Process

i. Measure As Per Applicable IFRS

ii. Measure @ Lower of CA & FV Less Cost to

Sell

iii. Subsequent Measurement

Non-Current Assets Held for Sale IFRS 5Measurement

Subsequent Measurement

• FV less costs to sell, less any impairment losses

determined @ initial classification

• Where subsequent FV less costs sell differs to

initial FV less costs to sell, asset must be

remeasured – may result in:-

– Further Impairment loss or

– Reversal of previous impairment losses

• Measure @ Lower of CA & FV Less Cost to Sell

Non-Current Assets Held for Sale IFRS 5Measurement

Subsequent Measurement

a. Once Classified do not depreciate asset

b. Re-measure annually until sold, resulting:-

a. Further impairment or

b. Reversal of impairment

c. Measure @ Lower of CA & FV Less Cost to

Sell

Non-Current Assets Held for Sale IFRS 5Impairment Loss

Individual Asset

a. Recognise impairment loss

on initial + subsequent

write-down to fv less costs

to sell

b. Treat in accordance with

IFRS 5 i.e.

a. Dr Impairment loss (SCI)

b. Cr Asset

Disposal Group

• Recognise impairment loss on

initial + subsequent write-

down to fv less costs to sell

• Reduce

1. Asset Within IFRS 5 Scope

2. Impair Good will Completely

3. Then remainder

Proportionately

4. To CA amount (N.B. Current

Assets not Affected)

Non-Current Assets Held for Sale IFRS 5Impairment Loss - Reversal

• Limited to Historical Impairment

• Dr Asset Cr Impairment Loss

• Goodwill never to restore

Non-Current Assets Held for Sale IFRS 5Changes to the plan of Sale

• When IFRS 5 Criteria No Longer Met

� Cease Classification

� Measure @ Lower of CA & Recoverable

Amount

• CA being – amount before classification as NCAHfS

• Then CA adjusted for Depreciation/ Amortasation

and revaluation

• As if assets Had not been Classified

Non-Current Assets Held for Sale IFRS 5Changes to the plan of Sale - Group

• What happens with an individual asset which

meets IFRS 5 criteria yet with a group that no

longer meets?

• Remains Held for Sale

Non-Current Assets Held for Sale IFRS 5Changes to the plan of Sale

- No Longer Classified – as NCHfS

- Required Adjustments:-

- Included in income From Continuing Operations

- Except:-

- Intangible Asset or PPE – follows a Revaluation model

- Then Adjustment amounts increase or decrease

Revaluation

Non-Current Assets Held for Sale IFRS 5Gain and Losses – on Sale

• Gain or Loss not previously recogninsed at initial classification or subsequent remeasurement is to be recognised at derecognition

• Gain or Losses determined from a difference between net disposal proceeds and the carrying amount

• Derecognition gains /losses included in profit or Loss (SCI)

• Consideration receivable on disposal – recognised at it’s FV , but if payment Deferred then PV.

Non-Current Assets Held for Sale IFRS 5De-recognition

• Gains / Loss included in P+L

• Revenue (IAS18) requirements met

• Gain/Loss on Disposal

• Difference of Net Disposal Proceeds and CA

Non-Current Assets Held for Sale IFRS 5Abandoned Assets

• Not Classified as NCAHfS – CA recovered

through use

• they Used to the end of economic life

• They are Closed down rather than sold

• They Exclude – temporarily out of service/ use

assets

Non-Current Assets Held for Sale IFRS 5Discontinued Operations

• Classed as Such :-

– Date Held for Sale Criteria Met

– Disposed off

– Its Component (held for sale or disposed of) –represents a major portion –

• Line of Business

• Geographical

• Subsidiary

– Part of a co-ordinated plan Acquired with a view to resell

Non-Current Assets Held for Sale IFRS 5Presentation & Disclosure

• (applies for all standards)

• Info Enables

• Users

• To evaluate financial effects

– Discontinued operations or

– Disposal of a non current asset