Non current assets and current fair value

[Yakub02]

The asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value;

 the sale must be expected to be completed within one year from the date of classification (except in limited circumstances) and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

If the criteria are met for a non-current asset (or disposal group) after the reporting date but before the authorisation of the financial statements for issue, that asset must not be classified as held for sale as at the reporting date.

However, the entity is required to make certain disclosures in respect of the non- current asset (or disposal group).

Sometimes circumstances might extend the period to complete the sale beyond a year.

This does not preclude an asset (or disposal group) from being classified as held for sale as long as:

 the delay is caused by events or circumstances beyond the entity’s control; and  there is sufficient evidence that the entity remains committed to its plan to sell the asset (or disposal group). IFRS 5 sets out detailed guidance on when this is deemed to be the case

 

[Yakub02]

Measurement of non-current assets and disposal group should for sale Assets held for sale and disposal groups should be measured at the lower of:

 their carrying amount (i.e. current values in the statement of financial position, as established in accordance with accounting standards and principles),

and  fair value less costs to sell. If the value of the ‘held for sale’ asset is adjusted from carrying amount to fair value less costs to sell, any impairment should be recognised as a loss in the statement of profit or loss for the period unless the asset to which it relates is carried at a previously recognised revaluation surplus.

In this case the loss is taken to other comprehensive income to the extent that it is covered by the previously recognised surplus on that asset. Any amount not covered is recognised in the statement of profit or loss

 

[Yakub02]

Allocation of an impairment loss on a disposal group IFRS 5 requires that if an impairment loss is recognised for a disposal group, the loss should be allocated to reduce the carrying amounts of those non-current assets in the disposal group (that are within the scope of the IFRS 5 measurement rules) in the following order:

 goodwill; then  other non-current assets pro-rated on the basis of their carrying values

Subsequent remeasurement Subsequent remeasurement of the non-current asset (or disposal group) might lead to:

 a further impairment loss - which must be recognised; or  a gain - which is recognised but only to the extent that it is covered by a previously recognised impairment loss.

 

[Yakub02]

Changes to a plan of sale If an asset (or disposal group) has been classified as held for sale, but the criteria are no longer met, it must be removed from this classification.

Such an asset is measured at the lower of:  the amount at which it would have been carried if it had never been classified as held for sale (i.e.: its carrying amount before it was classified as held for sale as adjusted for any depreciation, amortisation or revaluations that would have been recognised if it had not been so classified); and

 its recoverable amount at the date of the subsequent decision not to sell.* Any necessary adjustment to the carrying amount is recognised in income from continuing operations, in the same statement of profit or loss caption used to present a gain or loss on assets held for sale

 

[Yakub02]

Non-current assets classified as held for sale are presented separately from other assets in the statement of financial position.

The assets and liabilities of a disposal group classified as held for sale are presented separately from other assets and liabilities in the statement of financial position. These assets and liabilities must not be offset and presented as a single amount.

The major classes of assets and liabilities classified as held for sale must be separately disclosed either on the face of the statement of financial position or in the notes.

This disclosure is not required for disposal groups that are newly acquired subsidiaries that are classified as held for sale on acquisition. Comparatives are not restated to reflect the classification in the statement of financial position for the latest period presented.