Chapter 10: IFRS 5 NCA’s Held for Sale & Discontinued Operations

IFRS 5 NCA Held for Sale

A component of an entity that either has been disposed of or is classified as held for sale.

IFRS 5 NCA Classification: Held for Sale

• It is available for immediate sale in its present condition AND

• The sale is highly probable:

  • Management are committed to a plan to sell the asset

  • An active programme to locate a buyer has been initiated

  • The asset is being actively marketed at a reasonable price

  • The sale is expected to complete within one year form the date of classification

  • It is unlikely that the plan will change significantly or be withdrawn

• All criteria must be met

IFRS 5 NCA: Held for Sale Measurement

1. Remeasure asset at LOWER of carrying amount or FV - Cost to Sell

   • Like an impairment but ignore value in use.

2. Record any impairment loss:

   • Debit - Impairment Expense (SPL)

   • Credit - PPE (SPL)

3. Cease Depreciation

4. Reclassify asset as NCA Held for Sale:

   • Debit - Current Assets: NCA Held for Sale

   • Credit - NCA: PPE

IFRS 5 NCA: Held for Sale Measurement for Revalued Assets

• Exact same steps as before.

EXCEPT

• Before Step 1, Revalue asset to FV.

• NOTE: Any impairment loss (cost to sell) must charge to SPL as expense, can’t take from revaluation surplus.

IFRS 5 NCA Held for Sale: Presentation & Disclosure

Assets held for sale must be disclosed as a separate classification of current assets, just below the regular current asset section.