International Financial Reporting Standards_guide.pdf

224 Chapter 19 Noncurrent Assets Held for Sale and Discontinued Operations (IFRS 5)
19.3 KEY CONCEPTS
19.3.1 An operation is discontinued at the date the operation meets the criteria to be classified
as held for sale or when the entity has disposed of the operation and:
■ is a separate major line of business or geographical area (the rule of thumb is if the
operation is a reportable segment in terms of IFRS 8);
■ is part of a single coordinated disposal plan; or
■ is a subsidiary acquired exclusively with a view to resale.
19.3.2 A disposal group is a group of assets (and associated liabilities) to be disposed of, by
sale or otherwise, in a single transaction.
19.4 ACCOUNTING TREATMENT
Recognition
19.4.1 An entity should classify a noncurrent asset or disposal group as held for sale if its
carrying amount will be recovered principally through a sale transaction rather than through
continuing use.
19.4.2 An asset or disposal group should be classified as held for sale in a period in which
all the following criteria are met:
■ The asset or disposal group is available for immediate sale in its present condition.
■ A sale is highly probable and expected to be completed within one year. A sale is
highly probable if:
– management commits to a plan to sell;
– an active program and other actions exist to locate a buyer;
– a sale is expected to be completed within one year of date of classification;
– the asset or disposal group is actively marketed at a reasonable price; and
– it is unlikely that there will be significant changes to the marketing plan or that
management will consider withdrawing its plan to sell.
19.4.3 Classification as held for sale could still be appropriate after one year if the delay is
caused by events or circumstances beyond the entity’s control and there is sufficient evidence
that the entity remains committed to the plan to sell.
19.4.4 When an entity acquires a noncurrent asset (or disposal group) exclusively with a
view to its subsequent disposal, it should classify the noncurrent asset (or disposal group) as
held for sale at the acquisition date only if the one-year requirement in this IFRS is met
(except in circumstances beyond the entity’s control). If any other criteria are not met at that
date, it must be highly probable that these criteria will be met within a short period following
the acquisition (usually within three months). If the entity’s plans for sale change, classification
as a discontinued operation must cease immediately due to the requirements of
19.3.1.
19.4.5 A noncurrent asset (or disposal group) is classified as held for distribution to owners
when the entity is committed to distribute the asset (or disposal group) to its owners. For this
to be the case, the assets must be available for immediate distribution in their present condition
and the distribution must be highly probable (see 19.4.2 for requirements of highly
probable). The probability of shareholders’ approval (if required in the jurisdiction) should
be considered as part of the assessment of whether the distribution is highly probable.