PFRS 5  Assets classified as held for distribution to owners are measured at the lower of carrying

amount and fair value less cost to distribute

NONCURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
CHANGES IN FV LESS COSTS TO SELL
SCOPE
Subsequent changes in fair value less costs to sell are recognized in profit or loss as
 PPE impairment losses or gains on reversal of impairment.
 Investment property measured under the cost model
 Investment in associate, subsidiary, or joint venture NOTE: A gain on reversal of impairment is recognized only to the extent of cumulative impairment losses
 Intangible assets that have previously been recognized.

CLASSIFICATION AS HELD FOR SALE DEPRECIATION AND AMORTIZATION

A non-current asset is classified as held for sale or held for distribution to owners if its carrying amount
will be recovered principally through a sale transaction rather than through continuing use.
 The noncurrent asset or disposal group is available for immediate sale in its present condition
subject only to terms that are usual and customary; and
 The sale is highly probable
1. management committed to a plan to sell
2. actively locating a buyer
3. reasonable sale price relating to asset’s fair value
4. expected to be completed within one (1) year from the date of classification;
5. unlikely to withdraw plan to sell
Classification Issues
 Sale is not completed within one year
 from held for sale back to non-current asset
 asset is continued to be classified as held for sale if:
1. delay is caused by events beyond the entity’s control;
2. there is sufficient evidence that the entity remains committed on selling the asset
(or disposal group)
 Exchange of noncurrent assets
 Can be for sale when such exchange has a commercial substance in accordance with PAS
16, that is, measured at lower of carrying amount or fair value less cost to sell.
 Event after the reporting period
 A noncurrent asset or disposal group that meets the criteria for classification
as held for sale only after the reporting period is not classified as held for sale
in the current period’s financial statements.
 Exclusive view of subsequent disposal
 Classified as held for sale at the date of the acquisition only if it is anticipated
that it will be sold within the one-year period
 ü it is highly probable that the held for sale criteria will be met within a short
period (usually 3 months) of the acquisition date
 Noncurrent assets that are abandoned
 Not classified as NCAHFS whether permanently or temporarily abandoned.
MEASUREMENT
 Held for sale assets and disposal groups are initially and subsequently measured at the lower
of carrying amount and fair value less cost to sell
Held for sale assets are not depreciated or amortized while they are classified as held for sale. However,
interest and other related expenses attributable to financial instruments included in a disposal group are
continued to be recognized.
DISPOSAL GROUP
a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and
liabilities directly associated with those assets that will be transferred in the transaction.
Impairment Loss for Disposal Group Reduces the Carrying Amount of the Non-Current Assets
1. Order of Allocation:
a. Any goodwill allocated to the group; and
b. Other assets of the group on the basis of the carrying amount of each asset
2. Changes to a Plan of Sale:
a. Carrying amount- before it was classified as held for sale, adjusted for any depreciation,
amortization or revaluation that would have been recognized if the asset had not been
classified as held for sale.
b. Recoverable amount- at the date of subsequent decision not to sell.
DISCONTINUED OPERATIONS
A discontinued operation is “a component of an entity that either has been
disposed of or is classified as held for sale, and
a. represents a major line of business or geographical area of operations;
b. is part of a single coordinated plan to dispose of a separate major line of business or
geographical area of operations; or
c. is a subsidiary acquired exclusively with a view to resale.”
A component of an entity comprises “operations and cash flows that can be clearly distinguished,
operationally and for financial reporting purposes, from the rest of the entity.” It can be cash generating
unit or group of cash generating units.
When to classify a component as discontinued operation…
 Discontinued operations occur at the earlier of the date the component is actually disposed
of and the date the criteria for classification as held for sale are met.
PRESENTATION OF DISCONTINUED OPERATIONS
The results of discontinued operations are presented in the statement of profit or loss and
other comprehensive income as a single amount comprising the total of the following:
a. post-tax profit or loss of discontinued operations; and
b. post-tax gain or loss recognized on the measurement to fair value less costs to sell or on the
disposal of the assets constituting the discontinued operation.
 The results of discontinued operations are presented after “profit or loss from continuing
operations.”
GAINS OR LOSSES ON DISPOSAL OF DISCONTINUED OPERATIONS
If the actual disposal of a discontinued operation occurs in the same period, that the
component is classified as "held for sale" the gain or loss on disposal of discontinued operations is the
actual gain or loss on the disposal.
If the actual disposal of a discontinued operation occurs in a subsequent period after the
component is classified as "held for sale," the entity recognizes are estimated loss on disposal in the
period that the component is classified as discontinued operation.
Gains or losses on disposal of discontinued operations, including estimated losses, are
presented as part of the single amount representing the post-tax results of discontinued operations.
Gains or losses on held for sale assets that do not meet the criteria for presentation as
discontinued operations are presented as part of continuing operations.
DIRECT COSTS ASSOCIATED TO DECISION TO DISPOSE A COMPONENT
Costs or adjustments directly associated with the decision to dispose a component should be
recognized and shown as part of discontinued operations.
Examples of such costs include:
a. such items as severance pay or employee termination costs,
b. additional pension costs,
c. employee relocation expenses, and
d. future rentals on long-term leases.
Future operating losses from normal operations should not be recognized. Only losses and
expenses that result from present obligations are recognized.
RETROSPECTIVE APPLICATION
If a component of an entity qualified as discontinued operation during the year, all of its
results of operations, before and after the classification date, are classified as discontinued operations.
The financial statements in the prior period are restated so that the information presented
related to all operations that have been discontinued as of the reporting period for the latest period
presented.
EVENT AFTER THE REPORTING PERIOD
If the criteria for classification as discontinued operation are met after the reporting period
but before the financial statements are authorized for issue, the entity shall disclose the information in
the notes as non-adjusting event after the reporting period.
PRESENTATION IN THE STATEMTN OF FINANCIAL POSITION
 Held for sale asset are presented in the statement of Financial Position as CURRENT ASSETS
 The assets and liabilities of a disposal group are presented separately. Offsetting is prohibited.
CESSATION OF CLASSIFICTION AAS DISCONTINUED OPERATIONS
If a component of an entity ceases to be classified as a discontinued operation in the current
year, the previous financial statement is restated. previous disclosures for discontinued operations are
reclassified and included in continuing operations.
CESSATION OF CLASSIFICATION AS HELD FOR SALE
If non-current assets (disposal group) held for sale cease to be classified as held for sale, the
previous financial statement are not restated. The previous presentation and disclosures are retained for
the previous financial statements in other words:
 the cessation of classification as discontinued operation is accounted for retrospectively;
while
 the cessation of classification as held for sale (non-current assets and disposal groups that are
not components of an entity) is accounted for prospectively.
PRESENTING A DISCONTINUED OPERATION THAT HAS BEEN ABANDONED
PFRS 5 prohibits assets that will be abandoned from being classified as held for sale. However,
if the assets to be abandoned are a major line of business or geographical area of operations, they are
reported in discontinued operations at the date at which they are abandoned.
PRESENTATION IN THE STATEMNT OF CASH FLOWS
The net cash flows relating to the operating, investing, and financing activities of a noncurrent
asset (disposal group or discontinued operation) shall be presented separately in the statement of cash
flows, additional disclosures for the analyses shall be made either on the face of the statement of cash
flows ore in the notes.