IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations (Vocabulary Flashcards)

Vocabulary flashcards covering key IFRS 5 concepts: held for sale criteria, disposal groups, discontinued operations, measurement (FVLCTS, costs to sell), impairment allocation, and presentation requirements.

Held for sale

Classification of a non-current asset or disposal group when it is available for immediate sale and sale is highly probable within 12 months, with management commitment and an active plan to locate a buyer.

Disposal group

A group of assets and liabilities to be disposed of in a single transaction, or a group that has ceased to be part of the business because it is intended for sale.

Non-current assets held for sale

Assets that meet the held-for-sale criteria and are reclassified to a current asset line item in the balance sheet.

Discontinued operation

A component disposed of or held for sale that represents a separate major line of business or geographical area, or is part of a plan to dispose and may involve loss of control.

Available for immediate sale

Criterion that the asset can be sold in its present condition without significant delay.

Highly probable sale

Sale is highly probable within the applicable period, supported by a plan and active activities to locate a buyer.

Costs to sell

Incremental costs directly attributable to disposal of an asset or disposal group, excluding financing costs and income taxes.

Fair value less costs to sell (FVLCTS)

Fair value of the asset minus costs to sell; used in measuring held-for-sale assets.

Lower of carrying amount and FVLCTS

Measurement rule for held-for-sale assets: use the lesser of carrying amount or FVLCTS.

Impairment (held for sale)

If FVLCTS is lower than carrying amount, recognize impairment for the disposal group; impairment allocation may be pro-rata to non-current assets and include goodwill.

Stop amortization/depreciation

When classification as held for sale occurs, amortization and depreciation on the disposed assets cease.

Presentation in the balance sheet (HFS)

Assets held for sale and related liabilities are shown as separate lines within current assets and current liabilities; no offsetting.

Recoverable amount

The higher of value in use and fair value less costs of disposal used for impairment calculations in CGUs.

CGU (Cash Generating Unit)

Smallest identifiable group of assets that generates cash inflows largely independent of other assets.

Goodwill in disposal group

Goodwill is included in a disposal group if the group is a CGU to which goodwill has been allocated.

IFRS 9 assets under IFRS 5

Financial assets within the scope of IFRS 9 are still subject to IFRS 5 measurement requirements when part of the disposal group.

Intercompany balances and transactions (DO)

In consolidation, intercompany balances/transactions should be eliminated for the discontinued operation presentation.

Discontinued operation presentation (income statement)

A single post-tax line item in the income statement representing the effect of the discontinued operation; includes related cash flows and changes in equity information.