FAC Non-Current Assets Held for Sale IFRS 5

Transcription

1 FAC Non-Current Assets Held for Sale IFRS 5

2 - Introduction - Criteria to class NCAHfS - Extension Period - Criteria Met after reporting period - Measurement - Impairment Losses + Reversals - Disclosure - Discontinued Operations

3 Introduction IAS 1 prescribes that Assets and Liabilities be classified between current and non-current assets What is the difference between current and non-current assets Are NCAHfSclassified as current or noncurrent assets?

4 requirement s Non-Current Assets are classified as H4S(Held for Sale) only if Carrying Amount is to be recovered principally through sale. Are Assets acquired solely for subsequent disposal are classified as H4S? (it depends) Only if criteria Met

5 requirement s Requirements to classify 1. Asset available for sale Immediately 2. Is the sale highly probable? i.e. Significantly More likely than Probable. It is if :- I. Active program to locate a buyer II. Appropriate level of management is committed to plan III. Asset is actively marketed for sale IV. Sale is expected to be completed within 1 year

6 requirement s Criteria Met after reporting period Is it an Adjusting or Non-Adjusting event? -Non-Adjusting Disclose:- I. Asset description II. Facts and Circumstances leading to disposal manner and timing III. Where applicable Segment IFRS 8 operating segment

7 Extension to period required to complete sale Do we still classify as NCAHfS? I. Sufficient Evidence that entity still committed to sale. II. Delay upshot of circumstances of events beyond entity s control a. Which events can be beyond control of entity? i. Date of PlanConditions Expectedto be imposed at the date of plan by buyer resulting in delay to complete plan ii. Date of firm commitment -unexpectedconditions by the buyer resulting in delays to complete plan

8 Measurement Excluded from IFRS 5 measurement scope :- IAS 12 Deferred Tax IAS 19 Employee Benefits Assets IAS 39 Financial Instruments IAS 40 Investment Property IAS 41 Agricultural IFRS 4 Insurance

9 Measurement Steps in Measurement Process i. Measure As Per Applicable IFRS ii. Lower of CA & FV Less Cost to Sell iii. Subsequent Measurement

10 Measurement Subsequent Measurement FV less costs to sell, less any impairment losses initial classification Where subsequentfv less costs sell differs to initial FV less costs to sell, asset must be remeasured may result in:- Further Impairment loss or Reversal of previous impairment losses Lower of CA & FV Less Cost to Sell

11 Measurement Subsequent Measurement a. Once Classified do not depreciate asset b. Re-measure annually until sold, resulting:- a. Further impairment or b. Reversal of impairment c. Lower of CA & FV Less Cost to Sell

12 Impairment Loss Individual Asset a. Recognise impairment loss on initial + subsequent write-down to fvless costs to sell b. Treat in accordance with IFRS 5 i.e. a. Dr Impairment loss (SCI) b. Cr Asset Disposal Group Recognise impairment loss on initial + subsequent writedown to fvless costs to sell Reduce 1. Asset Within IFRS 5 Scope 2. Impair Good will Completely 3. Then remainder Proportionately 4. To CA amount (N.B. Current Assets not Affected)

13 Impairment Loss - Reversal Limited to Historical Impairment Dr Asset Cr Impairment Loss Goodwill never to restore

14 Changes to the plan of Sale When IFRS 5 Criteria No Longer Met Cease Classification Lower of CA & Recoverable Amount CA being amount before classification as NCAHfS Then CA adjusted for Depreciation/ Amortasation and revaluation As if assets Had not been Classified

15 Changes to the plan of Sale -Group What happens with an individual asset which meets IFRS 5 criteria yet with a group that no longer meets? Remains Held for Sale

16 Changes to the plan of Sale - No Longer Classified as NCHfS - Required Adjustments:- - Included in income From Continuing Operations - Except:- - Intangible Asset or PPE follows a Revaluation model - Then Adjustment amounts increase or decrease Revaluation

17 Gain and Losses on Sale Gain or Loss not previously recogninsedat initial classification or subsequent remeasurementis to be recognised at derecognition Gain or Losses determined from a difference between net disposal proceeds and the carrying amount Derecognitiongains /losses included in profit or Loss (SCI) Consideration receivable on disposal recognised at it s FV, but if payment Deferred then PV.

18 De-recognition Gains / Loss included in P+L Revenue (IAS18) requirements met Gain/Loss on Disposal Difference of Net Disposal Proceeds and CA

19 Abandoned Assets Not Classified as NCAHfS CA recovered through use they Used to the end of economic life They are Closed down rather than sold They Exclude temporarily out of service/ use assets

20 Discontinued Operations Classed as Such :- Date Held for Sale Criteria Met Disposed off Its Component (held for sale or disposed of) represents a major portion Line of Business Geographical Subsidiary Part of a co-ordinated plan Acquired with a view to resell

21 Presentation & Disclosure (applies for all standards) Info Enables Users To evaluate financial effects Discontinued operations or Disposal of a non current asset