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He Treatment If The Fair Value Less Cost of Disposal Is Lower Than The Carrying Amount of The Asset or Disposal Group

1. An asset must be classified as held for sale if its carrying amount will be recovered through a sale rather than continued use. It must be available for immediate sale, a sale must be highly probable within 12 months, and actions to complete the sale must have been initiated. 2. If classified as held for sale, the asset is measured at the lower of its carrying amount or fair value less costs to sell, except for certain assets which continue to be measured under their applicable standards. 3. Assets classified as held for sale must be presented separately from other assets in the statement of financial position and require additional disclosure.

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24 views

He Treatment If The Fair Value Less Cost of Disposal Is Lower Than The Carrying Amount of The Asset or Disposal Group

1. An asset must be classified as held for sale if its carrying amount will be recovered through a sale rather than continued use. It must be available for immediate sale, a sale must be highly probable within 12 months, and actions to complete the sale must have been initiated. 2. If classified as held for sale, the asset is measured at the lower of its carrying amount or fair value less costs to sell, except for certain assets which continue to be measured under their applicable standards. 3. Assets classified as held for sale must be presented separately from other assets in the statement of financial position and require additional disclosure.

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edrianclyde
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© © All Rights Reserved
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1.

) A non-current asset must be classified as held for sale if most of its carrying amount is expected to
be recovered via future cash flows from the sale of the asset rather than future cash flows from use.
IFRS 5 will not apply to a non-current asset that is going to be abandoned, as the carrying amount of an
abandoned asset will be recovered through future use.
2.) To classify an asset as held for sale, the asset or disposal group must be available for immediate sale
in its present condition and the sale must be highly probable. IFRS 5 sets out criteria for the sale to be
highly probable: Management must be committed to a plan to sell the asset, An active program to find a
buyer must be initiated, The asset must be actively marketed for sale at a price that is reasonable to its
current fair value, The sale must be completed within one year from the date of classification,
Significant changes to be made to the plan must be unlikely.

3.) the sale is highly probable, within 12 months of classification as held for sale (subject to limited
exceptions).

4.) Immediately before the asset is classified as held for sale, it should be measured under its applicable
IFRS. Subsequently, after it has been classified as held for sale it must be measured at the lower of its
carrying amount or fair value less costs to sell. However, IFRS 5 lists a few measurement exceptions:
Deferred tax assets (IAS 12 Deferred Tax), Assets arising from employee benefits (IAS 19 Employee
Benefits), Financial assets within the scope of IFRS 9 Financial Instruments, Non-current assets that
are accounted for under the fair value model in IAS 40 Investment Property, Non-current assets that are
measured at fair value less costs to sell in accordance with IAS 41 Agriculture, Contractual rights under
insurance contracts as defined in IFRS 4 Insurance Contracts.

5.) The treatment if the fair value less cost of disposal is lower than the carrying amount of the asset or
disposal group. If this assets is classified as held for sale, it must be measured under the same
accounting policy as before the classification. Although the accounting treatment of these assets does
not change, they must be presented separately from other assets and they require additional disclosure.

6.) The assets need to be disposed of through sale. Therefore, operations that are expected to be wound
down or abandoned would not meet the definition but may be classified as discontinued once
abandoned. An entity that is committed to a sale involving loss of control of a subsidiary that qualifies
for held-for-sale classification under IFRS 5 classifies all of the assets and liabilities of that subsidiary
as held for sale, even if the entity will retain a non-controlling interest in its former subsidiary after the
sale.

7.) If any of these assets like Deferred tax assets (IAS 12 Deferred Tax), Assets arising from employee
benefits (IAS 19 Employee Benefits), Financial assets within the scope of IFRS 9 Financial
Instruments, Non-current assets that are accounted for under the fair value model in IAS 40 Investment
Property, Non-current assets that are measured at fair value less costs to sell in accordance with IAS 41
Agriculture, and Contractual rights under insurance contracts as defined in IFRS 4 Insurance Contracts
are classified as held for sale, they must be measured under the same accounting policy as before the
classification. Although the accounting treatment of these assets does not change, they must be
presented separately from other assets and they require additional disclosure.
8.) In the statement of financial position: non-current assets of a disposal group must be presented
separately from other assets. The same applies for liabilities of a disposal group classified as held for
sale.

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