ACCOUNTING STANDARDS BOARD PROPOSED AMENDMENTS TO STANDARDS OF GENERALLY RECOGNISED ACCOUNTING PRACTICE

Transcription

1 ACCOUNTING STANDARDS BOARD PROPOSED AMENDMENTS TO STANDARDS OF GENERALLY RECOGNISED ACCOUNTING PRACTICE DISCONTINUED OPERATIONS (GRAP 100) (REVISED 2013) Issued by the Accounting Standards Board February 2013

2 Acknowledgement GRAP 100 This Exposure Draft of Proposed Amendments to the Standard of Generally Recognised Accounting Practice (GRAP) on Non-current Assets Held for Sale and is drawn primarily from the International Financial Reporting Standard (IFRS) 5 on Non-current Assets Held for Sale and issued by the International Accounting Standards Board (IASB). The IASB has issued a comprehensive body of IFRSs. Extracts of the IIFRS on Non-current Assets Held for Sale and are reproduced in this Standard of GRAP with the permission of the IASB. The approved text of the IFRS is that published by the IASB in the English language and copies may be obtained directly from: IASB Publications Department 30 Cannon Street London EC4M 6XH United Kingdom Internet: Copyright on IFRSs, exposure drafts and other publications of the IASB are vested in the International Accounting Standards Committee Foundation (IASCF) and terms and conditions attached should be observed. 2

3 Contents Standard of Generally Recognised Accounting Practice Paragraphs Introduction Objective.01 Scope.02 Definitions Discontinued operations Presentation and disclosure of discontinued operations Presenting discontinued operations Disclosing discontinued operations Transitional provisions Initial adoption of the Standards of GRAP.15 Amendments to Standards of GRAP Effective date Initial adoption of the Standards of GRAP.18 Entities already applying Standards of GRAP.19 Withdrawal of the Standards of GRAP on Non-current Assets Held for Sale and (2010).20 Appendix Consequential amendments to other Standards of GRAP Basis for conclusions Comparison with the International Financial Reporting Standard on Noncurrent Assets Held for Sale and (April 2009) 3

4 DISCONTINUED OPERATIONS GRAP 100 This Standard was originally issued by the Accounting Standards Board (the Board) in February Since then, it has been amended as follows: The measurement, presentation and disclosure requirements related to noncurrent assets held for sale were withdrawn in (February 2013). Introduction Standards of Generally Recognised Accounting Practice The Accounting Standards Board (the Board) is required in terms of the Public Finance Management Act, Act No. 1 of 1999, as amended (PFMA), to determine generally recognised accounting practice referred to as Standards of Generally Recognised Accounting Practice (GRAP). The Board must determine GRAP for: (c) (d) (e) (f) departments (including national and provincial government components); public entities; trading entities (as defined in the PFMA); constitutional institutions; municipalities and boards, commissions, companies, corporations, funds or other entities under the ownership control of a municipality; and Parliament and the provincial legislatures. The above are collectively referred to as entities. The Board has approved the application of Statements of Generally Accepted Accounting Practice (GAAP), as codified by the Accounting Practices Board and issued by the South African Institute of Chartered Accountants as at 1 April 2012, to be GRAP for the following entities applying Statements of GAAP: (c) government business enterprises (as defined in the PFMA); any other entity, other than a municipality, whose ordinary shares, potential ordinary shares or debt are publicly tradable on the capital markets; and entities under the ownership control of any of these entities. The Board has approved the application of International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board to be GRAP for these entities where they are applying IFRSs. Financial statements should be described as complying with Standards of GRAP only if they comply with all the requirements of each applicable Standard of GRAP and any related Interpretations of the Standards of GRAP. Any limitation of the applicability of specific Standards or Interpretations is made clear in those Standards or Interpretations of the Standards of GRAP. 4

5 The Standard of GRAP on is set out in paragraphs.01 to.19. All paragraphs in this Standard of GRAP have equal authority. The status and authority of appendices are dealt with in the preamble to each appendix. This Standard should be read in the context of its objective, its basis for conclusions if applicable, the Preface to Standards of GRAP, the Preface to the Interpretations of the Standards of GRAP and the Framework for the Preparation and Presentation of Financial Statements. Standards of GRAP and Interpretations of the Standards of GRAP should also be read in conjunction with any directives issued by the Board prescribing transitional provisions, as well as any regulations issued by the Minister of Finance regarding the effective dates of the Standards of GRAP, published in the Government Gazette. Reference may be made here to a Standard of GRAP that has not been issued at the time of issue of this Standard. This is done to avoid having to change the Standards already issued when a later Standard is subsequently issued. Paragraph.11 of the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance. 5

6 Objective.01 The objective of this Standard is to specify the presentation and disclosure of discontinued operations. In particular, the Standard requires the results of discontinued operations to be presented separately in the statement of financial performance with additional disclosures provided in the notes to the financial statements. Scope.02 An entity that prepares and presents financial statements under the accrual basis of accounting shall apply this Standard in presenting and disclosing discontinued operations. Definitions.03 The following terms are used in this Standard with the meanings specified: Cash-generating assets are assets held with the primary objective of generating a commercial return. A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets. A component of an entity is the operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. Discontinued operation is a component of an entity that has been disposed of and: (c) represents a distinguishable activity, group of activities or geographical area of operations; is part of a single co-ordinated plan to dispose of a distinguishable activity, group of activities or geographical area of operations; or is a controlled entity acquired exclusively with a view to resale. Non-cash-generating assets are assets other than cash-generating assets. Terms defined in other Standards of GRAP are used in this Standard with the same meaning as in those other Standards of GRAP. 6

7 Discontinued operation.04 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. In other words, a component of an entity will have been a cash-generating unit, a group of cash-generating units or non-cash-generating assets while being held for use..05 A distinguishable activity or group of activities in the context of this Standard refers to the disposal of a significant operating activity within the entity. For example, an electricity distribution unit within a municipality may be a distinguishable activity or group of activities that can be sold disposed of separately..06 In disposing of a component, an entity may dispose of the assets and liabilities (if any) either individually or in small groups. The effect is that the settlement of the liabilities may occur over a period of time. To qualify as a discontinued operation, the disposal must occur within a single co-ordinated plan..07 An entity may dispose of a component without it being sold or transferred to another entity, for example, groups of assets that will be used to the end of their economic life or activities that will be ceased rather than sold. Components disposed of in this way are disposed of through abandonment. An abandoned component would be a discontinued operation if it otherwise satisfies the criteria in the definition of a discontinued operation. If assets or activities within a component are temporarily taken out of use or ceased, they should not be accounted for as a discontinued operation. Similarly, changing the scope of a component or the manner in which an activity is undertaken does not constitute an abandonment. Presentation and disclosure of discontinued operations.08 An entity shall present and disclose information that enables users of the financial statements to evaluate the financial effects of discontinued operations. Presenting discontinued operations.09 An entity shall disclose: A single amount on the face of the statement of financial performance comprising the total of: (i) (ii) the post-tax surplus or deficit of discontinued operations; and the post-tax gain or loss recognised on the disposal of the discontinued operation. An analysis of the single amount in into: (i) the revenue, expenses and pre-tax surplus or deficit of discontinued 7

8 (c) (ii) (iii) operations; the related income tax expense as required by paragraph 81(h) of the International Accounting Standard on Income Taxes (where applicable); and the gain or loss recognised on the disposal of the discontinued operation. The analysis may be presented in the notes or on the face of the statement of financial performance. If it is presented on the face of the statements of financial performance it shall be presented in a section identified as relating to discontinued operations, i.e. separately from continuing operations. The net cash flows attributable to the operating, investing and financing activities of discontinued operations. These disclosures may be presented either in the notes or on the face of the financial statements..10 An entity shall re-present the disclosures in paragraph.10 for prior periods presented in the financial statements so that the disclosures relate to all operations that have been discontinued by the reporting date for the latest period presented..11 Adjustments in the current period to amounts previously presented in discontinued operations that are directly related to the disposal of a discontinued operation in a prior period shall be classified separately in discontinued operations. The nature and amount of such adjustments shall be disclosed. Examples of circumstances in which these adjustments may arise include the following: (c) The resolution of uncertainties that arise from the terms of the disposal transaction, such as the resolution of purchase price adjustments and indemnification issues with the purchaser. The resolution of uncertainties that arise from and are directly related to the operations of the component before its disposal, such as environmental and other obligations retained by the seller. The settlement of employee benefit plan obligations, provided that the settlement is directly related to the disposal transaction. Disclosing discontinued operations.12 An entity shall disclose the following information in the notes in the period in which the disposal of a component occurs: (c) a description of the component; a description of the facts and circumstances of the disposal; and if applicable, the segment in which the component is presented in accordance with the Standard of GRAP on Segment Reporting..13 Additional disclosures about discontinued operations may be necessary to comply with the general requirements of the Standard of GRAP on Presentation of Financial Statements (2010), in particular paragraphs.17 and.131 of that Standard. 8

9 Transitional provisions Initial adoption of the Standards of GRAP.14 The transitional provisions to be applied by entities on the initial adoption of this Standard are prescribed in a directive(s). The provisions of this Standard should be read in conjunction with each applicable directive. Amendments to Standards of GRAP.15 An entity shall apply the amendments as follows: Changes to the way in which non-current assets held for sale are measured, shall be applied prospectively at the beginning of the period in which these amendments are adopted. Changes to the way in which non-current assets held for sale are classified and presented on the statement of financial position and accompanying notes, shall be applied retrospectively by adjusting information for the earliest period presented..16 An entity shall apply the amendments to the Standards as follows: Any changes to the way in which non-current assets held for sale are measured, are applied prospectively at the beginning of the year in which the amendments are adopted. This means that an entity would assess the residual values, useful lives, depreciation methods, and any indicators of impairment at the beginning of the period in which the amendments are adopted and need not be done for prior periods. Any changes to the way in which non-current assets held for sale are classified and presented on the statement of financial position and the notes, are applied retrospectively by adjusting the comparative information presented for the different asset and liability line items on the statement of financial position. Effective date Initial adoption of the Standards of GRAP.17 An entity shall apply this Standard of GRAP for annual financial statements covering periods beginning on or after a date to be determined by the Minister of Finance in a regulation to be published in accordance with section 91(1) of the Public Finance Management Act No. 1 of 1999 as amended. Entities already applying Standards of GRAP.18 An entity shall apply the amendments to this Standard issued in February 2013 for annual financial statements covering periods beginning on or after 1 April 9

10 2014. Withdrawal of the Standard of GRAP on Non-current Assets Held for Sale and (2010).19 This Standard supersedes the Standard of GRAP on Non-current Assets Held for Sale and issued February

11 Appendix Consequential amendments to other Standards of GRAP GRAP 100 The purpose of the appendix is to identify the consequential amendments to other Standards of GRAP resulting from the amendments to the Standard of GRAP on Noncurrent Assets Held for Sale and. Amended text is shown with new text underlined and deleted text struck through. A. Amendments to Standards of GRAP A1. The following paragraphs in the Standard of GRAP on Presentation of Financial Statements should be amended, added or deleted: Information to be presented on the face of the statement of financial position.77 The face of the statement of financial position shall also include line items that present the following amounts: the total assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and ; and liabilities included in disposal groups classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and..80 This Standard does not prescribe the order or format in which items are to be presented. Paragraphs.76 and.77 simply provide a list of items that are sufficiently different in nature or function to warrant separate presentation on the face of the statement of financial position. In addition: line items are included when the size, nature or function of an item or aggregation of similar items is such that separate presentation is relevant to an understanding of the entity s financial position; and the descriptions used and the ordering of items or aggregation of similar items may be amended according to the nature of the entity and its transactions, to provide information that is relevant to an understanding of the entity s financial position..88a If, at the reporting date, management has taken a decision to dispose of a significant asset or a group of assets and liabilities or, a component of an entity (see the Standard of GRAP on ), the entity shall disclose the following information: A description of the asset(s), group of assets and liabilities or, component. The carrying values of the assets or, if the disposal involves a group of assets and liabilities or a component of an entity, the carrying amounts of those assets and liabilities. 11

12 (c) (d) (e) GRAP 100 A description of the facts and circumstances of the disposal, including whether any further approvals are required and, the expected sale or transfer date. Details of any disposals completed during the year. A description of any circumstances that may have resulted in a decision to dispose of an asset being reversed during the reporting period. 88B. The disclosures in paragraph 88A are only required for those assets or groups of assets and liabilities that are significant to an entity and its operations. Whether an asset or a group of assets and liabilities is significant is a matter of judgement. As examples, an asset or a group of assets and liabilities may be significant to an entity if: (c) (d) the assets are used in providing the minimum level of basic services; disposing of the asset may affect the entity s credit rating; the community has an interest in or will be affected by the disposal of the asset; or the asset has a high value in relation to a particular class of asset or group of assets and/or liabilities. A2. The following paragraphs in the Standard of GRAP on Consolidated and Separate Financial Statements (issued in November 2010) should be amended, added or deleted: Scope of consolidated financial statements.19 Delete the footnote 1 to paragraph 19: If on acquisition a controlled entity meets the criteria to be classified s held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations, it shall be accounted for in accordance with that Standard. Accounting for investments in controlled entities, jointly controlled entities and associates in separate financial statements.59 When an entity prepares separate financial statements, it shall account for investments in controlled entities, jointly controlled entities and associates either: at cost; or in accordance with the Standard of GRAP on Financial Instruments. The entity shall apply the same accounting for each category of investments. Investments accounted for at cost shall be accounted for in accordance with the Standard of GRAP on Non-current Assets Held for Sale and when they are classified a held for sale (or included in a disposal group that is classified as held for sale) in 12

13 accordance with that Standard. The measurement of investments accounted for in accordance with the Standard of GRAP on Financial Instruments is not changed in such circumstances. Disclosure.64A When a controlled entity is acquired exclusively with a view to its subsequent disposal, the following disclosures shall be made in the notes of the separate financial statements: The name of the controlled entity and the rationale for its acquisition. A description of the intended disposal, including the expected date of sale or transfer. (c) The carrying values of the assets and liabilities that will be affected by the disposal of the controlled entity. Transitional provisions.70 Paragraph.59 was amended by Improvements to the Standards of GRAP issued in November An entity shall apply these amendments prospectively for annual financial periods beginning on or after DDMMYYYY [in conjunction with the effective date to be determined by the Minister of Finance for GRAP 105, 106 and 107] from the date at which it first applied the Standard of GRAP on Non-current Assets Held for Sale and. If an entity elects to apply these amendments earlier, it shall disclose this fact. Comparison with the International Public Sector Accounting Standard on Consolidated and Separate Financial Statements (December 2006) [Based on revised GRAP 6 issued in November 2010] IPSAS 6 excludes those investments from consolidation where control is temporary and the investment is to be disposed of in the near future. This Standard requires that they be consolidated and specific disclosures included in the notes to the separate financial statements presented and disclosed in accordance with the Standard of GRAP on Non-current Assets Held for Sale and. A3. The following paragraphs in the Standard of GRAP on Investments in Associates (issued in November 2010) should be amended, added or deleted: Application of the equity method.18 An investment in an associate shall be accounted for using the equity method except when: the investment is classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and ; the exception in paragraph.15 of the Standard of GRAP on Consolidated and Separate Financial Statements, allowing a 13

14 (c) GRAP 100 controlling entity that also has an investment in an associate not to present consolidated financial statements, applies; or all of the following apply: (i)..19 Investments described in paragraph.18 shall be accounted for in accordance with the Standard of GRAP on Non-current Assets Held for Sale and..20 When an investment in an associate previously classified as held for sale no longer meets the criteria to be so classified, it shall be accounted for using the equity method as from the date of its classification as held for sale. Financial statements for the periods since classification as held for sale shall be amended accordingly. Disclosures.44 The following disclosures shall be made: - (h). (i) (j) The fact that an associate is not accounted for using the equity method in accordance with paragraph.18; and A description of any investments in associates that are acquired exclusively with a view to their subsequent disposal, the rationale for such an acquisition, as well as a description of the intended disposal. Comparison with the International Public Sector Accounting Standard on Investments in Associates (December 2006) IPSAS 7 excludes those investments from equity accounting where control is temporary and the asset is to be disposed of in the near future. This Standard requires that they be equity accounted and presented and information about such investments disclosed in financial statements accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations. A4. The following paragraphs in the Standard of GRAP on Interests in Joint Ventures (issued in November 2010) should be amended, added or deleted: Scope.05 A venturer with an interest in a jointly controlled entity is exempted from paragraphs.36 (proportionate consolidation) and.44 (equity method) when it meets any of the following conditions: The interest is classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and ;. Exceptions to proportionate consolidation and equity method 14

15 .48 Interests in jointly controlled entities that are classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and shall be accounted for in accordance with that Standard of GRAP..49 When an interest in a jointly controlled entity previously classified as held for sale no longer meets the criteria to be so classified, it shall be accounted for using the proportionate consolidation or the equity method as from the date of its classification as held for sale. Financial statements for the periods since classification as held for sale shall be amended accordingly. Disclosure.68 A venturer shall also disclose the following: -(c).. (d) A description of any interests in joint ventures that are acquired exclusively with a view to their subsequent disposal, the rationale for such an acquisition, as well as a description of the intended disposal. Comparison with the International Public Sector Accounting Standard on Interests in Joint Ventures (December 2006) IPSAS 8 excludes those investments from proportionate consolidation or equity accounting where control is temporary and the asset is to be disposed of within the near future. This Standard requires that they be equity accounted and presented and information about such investments disclosed in the financial statements accordance with the Standard of GRAP on Non-current Assets Held for Sale and. A5. The following paragraphs in the Standard of GRAP on Leases should be amended or deleted:.51 An asset under a finance lease that is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations shall be accounted for in accordance with that Standard. Comparison with International Public Sector Accounting Standard on Leases (December 2006) The Standard of Generally Recognised Accounting Practice on Leases has incorporated changes made to the International Accounting Standard on Leases (IAS 17) up to April 2009 under the Improvements project of the International Accounting Standards Board (IASB). This includes amendments to the guidance on the split between land and buildings in a lease agreement and amendments as a result of the issuing of the Standard of GRAP on Noncurrent Asset Held for Sale and. A6. The following paragraph in the Standard of GRAP on Events After the Reporting Date should be amended: 15

16 .28 The following are examples of non-adjusting events after the reporting date that would generally result in disclosure: -(d). (e) (f)-(l). Major purchases of assets, classification of assets held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and, other major disposals of assets, groups of assets and liabilities, components (see the Standard of GRAP on ) or expropriation of major assets by government. A7. The following paragraphs in the Standard of GRAP on Investment Property should be amended: Measurement after recognition Cost model.63 After initial recognition, an entity that chooses the cost model shall measure all of its investment property in accordance with the Standard of GRAP on Property, Plant and Equipment, i.e., at cost less any accumulated depreciation and any accumulated impairment losses, other than those that meet the criteria as held for sale (or are included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations. Investment properties that meet the criteria to be classified as held for sale (or are included in a disposal group that is classified as held for sale) shall be measured in accordance with that Standard. Disclosure Fair value model.84 In addition to the disclosures required by paragraph.83, an entity that applies the fair value model in paragraphs.38 to.62 shall disclose a reconciliation between the carrying amounts of investment property at the beginning and end of the period, showing the following: (c) additions, disclosing separately those additions resulting from acquisitions and those resulting from subsequent expenditure recognised in the carrying amount of an asset; additions resulting from acquisitions through entity combinations; assets classified as held for sale or included in a disposal group classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and and other disposals; (d)(c) net gains or losses from fair value adjustments; (e)(d) the net exchange differences arising on the translation of the financial statements into a different presentation currency, and on 16

17 translation of a foreign operation into the presentation currency of the controlling entity; (f)(e) transfers to and from inventories and owner-occupied property; and (g)(f) other changes. Cost model.87 In addition to the disclosures required by paragraph.83, an entity that applies the cost model in paragraph.63 shall disclose: (c) (d) the depreciation methods used; the useful lives or the depreciation rates used; the gross carrying amount and the accumulated depreciation (aggregated with accumulated impairment losses) at the beginning and end of the period; a reconciliation of the carrying amount of investment property at the beginning and end of the period, showing the following: (i) additions, disclosing separately those additions resulting from acquisitions and those resulting from subsequent expenditure recognised as an asset; (ii) additions resulting from acquisitions through entity combinations; (iii) assets classified as held for sale or included in a disposal group classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and and other disposals; (iv)(iii) depreciation; (v)(iv) (vi)(v) the amount of impairment losses recognised, and the amount of impairment losses reversed, during the period in accordance with the Standard of GRAP on Impairment of Cash-generating Assets; the net exchange differences arising on the translation of the financial statements into a different presentation currency, and on translation of a foreign operation into the presentation currency of the reporting entity; (vii)(vi) transfers to and from inventories and owner-occupied property; and (viii)(vii) other changes. Comparison with International Public Sector Accounting Standard on Investment Property (December 2006) 17

18 GRAP 100 The Standard of GRAP on Investment Property has incorporated changes to International Accounting Standards on Investment Property under the improvements project of the International Accounting Standards Board (IASB). This includes the reclassification of investment property held for sale or included in a disposal group classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations and the classification of investment property under construction. A8. The following paragraphs in the Standard of GRAP on Property, Plant and Equipment should be amended or added: Scope.02 An entity that prepares and presents financial statements under the accrual basis of accounting shall apply this Standard in accounting for property, plant and equipment, except: when a different accounting treatment has been adopted in accordance with another Standard of GRAP; property, plant and equipment classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and ; (c) biological assets related to agricultural activity (see Standard of GRAP on Agriculture); (d)(c) heritage assets (see Standard of GRAP on Heritage Assets); (e)(d) the recognition and measurement of exploration and evaluation assets (see the International Financial Reporting Standard on Exploration for and Evaluation of Mineral Resources; and (f)(e) mineral rights, and mineral reserves such as oil, natural gas and similar non-regenerative resources. However, this Standard applies to property, plant and equipment used to develop or maintain the assets described in to (e)(d). Depreciable amount and depreciation period.61 Depreciation of an asset begins when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations and the date that the asset is derecognised. Therefore, depreciation does not cease when the asset becomes idle or is retired from active use and held for disposal unless the asset is fully depreciated. However, under usage methods of depreciation the depreciation charge can be zero while there is no production. 18

19 Impairment GRAP A A plan to dispose of an asset before the previously expected date is an indicator of impairment, which requires the calculation of an asset s recoverable amount or recoverable service amount for the purpose of determining whether the asset is impaired. Derecognition.74 However, an entity that in the course of its ordinary activities sells items of property, plant and equipment that it has held for rental to others shall transfer such assets to inventories at their carrying amount when they cease to be rented and become held for sale. The proceeds from the sale of such assets shall be recognised in accordance with the Standard of GRAP on Revenue from Exchange Transactions. The Standard of GRAP on Non-current Assets Held for Sale and does not apply when assets that are held for sale in the ordinary course of operations are transferred to inventories. Disclosure.85 Users of financial statements may also find the following information relevant to their needs: (c) (d) the carrying amount of temporarily idle property, plant and equipment; the gross carrying amount of any fully depreciated property, plant and equipment that is still in use; the carrying amount of property, plant and equipment retired from active use and not classified as a discontinued operation held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and ; and when the cost model is used, the fair value of property, plant and equipment when this is materially different from the carrying amount. Therefore, entities are encouraged to disclose these amounts. Comparison with International Public Sector Accounting Standard on Property, Plant and Equipment (December 2006) The Standard of GRAP on Property, Plant and Equipment has incorporated changes to the International Accounting Standard on Property, Plant and Equipment (IAS 16) under the Improvements project of the International Accounting Standards Board (IASB) up to April Paragraphs included relate to assets held for rental to others in the ordinary course of operations and the entity is selling these assets subsequently, amendments as a result of the issuing of the Standard of GRAP on Non-current Assets Held for Sale and and amendments as a result of the exclusion of investment property under construction. 19

20 A9. The following paragraphs in the Standard of GRAP on Provisions, Contingent Liabilities and Contingent Assets should be amended: Scope.03 This Standard applies to: provisions, contingent liabilities and contingent assets of an insurer (who, for purposes of this Standard, is primarily engaged in insurance activities), other than those arising from its contractual obligations and rights under insurance contracts within the scope of the International Financial Reporting Standard on Insurance Contracts; and provisions for restructuring (including discontinued operations). In some cases, a restructuring may meet the definition of a discontinued operation. Guidance on disclosing information about discontinued operations is found in the Standard of GRAP on Non-current Assets Held for Sale and. A10. The following paragraphs in the Standard of GRAP on Impairment of Non-cashgenerating Assets should be amended: Scope.02 An entity that prepares and presents financial statements under the accrual basis of accounting shall apply this Standard in accounting for impairment of non-cash-generating assets, except: -(d) (e) biological assets related to agricultural activity that are measured at fair value less costs to sell (see the Standard of GRAP on Agriculture); and (f) non-current assets (or disposal groups) classified as held for sale that are measured at the lower of carrying amount and fair value less costs to sell in accordance with the Standard of GRAP on Noncurrent Assets Held for Sale and ; and (g)(f) other non-cash-generating assets in respect of which accounting requirements for impairment are included in another Standard of GRAP..04 This Standard does not apply to inventories and non-cash-generating assets arising from construction contracts because existing Standards of GRAP applicable to these assets contain requirements for recognising and measuring such assets (see the Standards of GRAP on Inventories and Construction Contracts). In addition, this Standard does not apply to biological assets related to agricultural activity that are measured at fair value less costs to sell and non-current assets (or disposal groups) classified as held for sale that are measured at the lower of carrying amount and fair value less costs to sell. The Issued Month

21 relevant Standards of GRAP dealing with such assets contain measurement requirements. Reversing an impairment loss.57 In assessing whether there is any indication that an impairment loss recognised in prior periods for an asset may no longer exist or may have decreased, an entity shall consider, as a minimum, the following indications: External sources of information - Internal sources of information (c) (d)-(e) Significant long-term changes with a favourable effect on the entity have taken place during the period, or are expected to take place in the near future, in the extent to which, or manner in which, the asset is used or is expected to be used. These changes include costs incurred during the period to improve or enhance an asset s performance, or restructure the operation to which the asset belongs. or a decision to use rather than dispose of an asset. Comparison with the International Public Sector Accounting Standard on Impairment of Non-Cash-Generating Assets (February 2007) The scope of the Standard of GRAP is different in that biological assets related to agricultural activities that are measured at fair value less costs to sell and non-current assets (or disposal groups) classified as held for sale are excluded from the scope of this Standard. IPSAS 21 has no such scope exclusions. A11. The following paragraphs in the Standard of GRAP on Impairment of Cashgenerating Assets should be amended: Scope.02 An entity that prepares and presents financial statements under the accrual basis of accounting shall apply this Standard in accounting for the impairment of cash-generating assets, except for: -(g) (h) (i) deferred acquisition costs, and intangible assets, arising from an insurer s contractual rights under insurance contracts within the scope of the International Financial Reporting Standard on Insurance Contracts); and non-current assets (or disposal groups) classified as held for sale that are measured at the lower of carrying amount and fair value less costs to sell in accordance with the Standard of GRAP on Noncurrent Assets Held for Sale and ; and 21

22 (j)(i) other cash generating assets in respect of which accounting requirements for impairment are included in another Standard of GRAP..04 This Standard does not apply to inventories and cash-generating assets arising from construction contracts, because existing Standards of GRAP applicable to these assets contain requirements for recognising and measuring such assets (see the Standards of GRAP on Inventories and Construction Contracts). This Standard does not apply to deferred tax assets (see the relevant International Accounting Standard), assets related to employee benefits (see the Standard of GRAP on Employee Benefits), or deferred acquisition costs and intangible assets arising from an insurer s contractual rights under insurance contracts (see the relevant International Financial Reporting Standard). In addition, this Standard does not apply to biological assets related to agricultural activity that are measured at fair value less costs to sell and non-current assets (or disposal groups) classified as held for sale that are measured at the lower of carrying amount and fair value less costs to sell. The relevant Standards of GRAP dealing with such assets contain measurement requirements. Reversing an impairment loss.99 In assessing whether there is any indication that an impairment loss recognised in prior periods for an asset may no longer exist or may have decreased, an entity shall consider, as a minimum, the following indications: External sources of information -(c) Internal sources of information (d) (e) Significant changes with a favourable effect on the entity have taken place during the period, or are expected to take place in the near future, in the extent to which, or manner in which, the asset is used or is expected to be used. These changes include costs incurred during the period to improve or enhance the asset's performance, or restructure the operation to which the asset belongs, or a decision to use rather than dispose of an asset. A12. The following paragraphs in the Standard of GRAP on Agriculture should be amended: Inability to measure fair value reliably.34 There is a presumption that fair value can be measured reliably for a biological asset. However, that presumption can be rebutted only on initial recognition for a biological asset for which market-determined prices or values are not available and for which alternative estimates of fair value are determined to be clearly unreliable. In such a case, that biological asset shall be measured at its cost less any accumulated 22

23 depreciation and any accumulated impairment losses. Once the fair value of such a biological asset becomes reliably measurable, an entity shall measure it at its fair value less estimated point-of-sale costs. Once a non-current biological asset meets the criteria to be classified as held for sale (or is included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-Current Assets Held for Sale and, it is presumed that fair value can be measured reliably..48 An entity shall present a reconciliation of changes in the carrying amount of biological assets between the beginning and the end of the current period. The reconciliation shall include: -(c) (d) (e)-(h). decreases attributable to sales and biological assets classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non- Current Assets Held for Sale and ; A13. The following paragraphs in the Standard of GRAP on Intangible Assets should be amended: Scope.04 Where the accounting for a specific type of intangible asset is prescribed by another Standard of GRAP, an entity applies that Standard of GRAP. For example, this Standard does not apply to: -(h) (i) non-current intangible assets classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and. (j)(i) heritage assets as defined in the Standard of GRAP on Heritage Assets. Intangible assets with finite useful lives Amortisation period and amortisation method.100 The depreciable amount of an intangible asset with a finite useful life shall be allocated on a systematic basis over its useful life. Amortisation shall begin when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Amortisation shall cease at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations and the date that the asset is derecognised. The amortisation method used shall reflect the pattern in which the asset s future economic benefits or service potential are expected to be consumed by 23

24 the entity. If that pattern cannot be determined reliably, the straight line method shall be used. The amortisation charge for each period shall be recognised in surplus or deficit unless this or another Standard permits or requires it to be included in the carrying amount of another asset. Retirements and disposals.120 Amortisation of an intangible asset with a finite useful life does not cease when the intangible asset is no longer used, unless the asset has been fully depreciated or is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and. Disclosure General.121 An entity shall disclose the following for each class of intangible assets, distinguishing between internally generated intangible assets and other intangible assets: -(d) (e) A reconciliation of the carrying amount at the beginning and end of the period showing: (i) additions, indicating separately those from internal development and those acquired separately; (ii) (iii) disposals; assets classified as held for sale or included in a disposal group classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and ; (iv)(iii) increases or decreases during the period resulting from revaluations under paragraphs.78,.88 and.89 and from impairment losses recognised or reversed directly in net assets in accordance (if any) with the Standards of GRAP on Impairment of Cash-generating Assets and Impairment of Non-cash-generating Assets; (v)(iv) (vi)(v) impairment losses recognised in surplus or deficit during the period in accordance (if any) with the Standards of GRAP on Impairment of Cash-generating Assets and Impairment of Non-cash-generating Assets; impairment losses reversed in surplus or deficit during the period in accordance (if any) with the Standards of GRAP on Impairment of Cash-generating Assets and Impairment of Non-cash-generating Assets); (vii)(vi) any amortisation recognised during the period; 24

25 (viii)(vii) net exchange differences arising on the translation of the financial statements into the presentation currency, and on the translation of a foreign operation into the presentation currency of the entity; and (ix)(viii) other changes in the carrying amount during the period. A14. The following paragraph in the Standard of GRAP on Heritage Assets should be amended: Scope.02 An entity that prepares and presents financial statements under the accrual basis of accounting shall apply this Standard in the recognition, measurement and disclosure of all assets that meet the definition of a heritage asset, except heritage assets classified as held for sale (see the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations). A15. The following paragraph in the Standard of GRAP on Transfers of Functions Between Entities Under Common Control should be amended: Disclosure Transferor.61 The transferor shall disclose the following, in addition to the disclosure requirements required in the Standard of GRAP on Non-current Assets Held for Sale and, for each transfer of functions that occurred during the reporting period: for each affected line item in the financial statements, the carrying amount of the assets transferred and the liabilities relinquished ; the difference between the carrying amounts of the assets transferred, the liabilities relinquished and the consideration received (if any) from the acquirer, as a separate line item in net assets. Financial statements of subsequent periods need not repeat these disclosures. A16. The following paragraphs outlined as consequential amendments to the Standards of GRAP on Transfers of Functions Between Entities Not Under Common Control, Transfers of Functions Between Entities Under Common Control and Mergers should be deleted: Amendments to the Standard of GRAP on Impairment of Non-cash-generating Assets - Delete paragraph.08b as a consequential amendment.08b This Standard does not apply to an acquiree s non-cash-generating assets in a transfer of functions between entities not under common control once these assets have been classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and. 25

26 Amendments to the Standard of GRAP on Impairment of Cash-generating Assets - Delete paragraph.08b as a consequential amendment.08b This Standard does not apply to an acquiree s cash-generating assets in a transfer of functions between entities not under common control once these assets have been classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and. Amendments to the Standard of GRAP on Non-current Assets Held for Sale and - Delete paragraph.08b as a consequential amendment and change paragraph numbering from.06a to.02a.06 The measurement provisions of this Standard do not apply to the following assets, which are covered by the Standards listed, either as individual assets or as part of a disposal group:.. (e) assets or disposal groups transferred in a transfer of functions between entities under common control (see the Standard of GRAP on Transfer of Functions Between Entities Under Common Control) or in a merger (see the Standard of GRAP on Mergers); and.06a.02a The disclosure requirements of this Standard do not apply to the combining entities in a merger. Amendments to the Standard of GRAP on Heritage Assets delete numbering as deleted..02 An entity that prepares and presents financial statements under the accrual basis of accounting shall apply this Standard in the recognition, measurement and disclosure of all assets that meet the definition of a heritage asset, except: heritage assets classified as held for sale (see the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations); and the initial recognition and initial measurement of heritage assets acquired in a transfer of functions between entities under common control (see the Standard of GRAP on Transfer of Functions Between Entities Under Common Control) or a merger (see the Standard of GRAP on Mergers). A17. The following paragraph in the Standard of GRAP on Transfers of Functions Between Entities Under Common Control should be amended: Assets held for sale.64 The acquirer shall measure an acquired non-current asset (or disposal group) that is classified as held for sale at the acquisition date in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations at fair value less costs to sell in accordance with paragraphs.20 to.24 of that Standard. 26