all of the assets and liabilities of that subsidiary

Summary of IFRS 5 as held for sale, even if the entity will retain a
Background non-controlling interest in its former subsidiary
after the sale. [IFRS 5.8A]
IFRS 5 achieves substantial convergence with
the requirements of US SFAS 144 Accounting for Held for distribution to owners classification
the Impairment or Disposal of Long-Lived Assets The classification, presentation and
with respect to the timing of the classification of measurement requirements of IFRS 5 also apply
operations as discontinued operations and the to a non-current asset (or disposal group) that is
presentation of such operations. With respect to classified as held for distribution to owners.
long-lived assets that are not being disposed of, [IFRS 5.5A and IFRIC 17] The entity must be
the impairment recognition and measurement committed to the distribution, the assets must
standards in SFAS 144 are significantly different be available for immediate distribution and the
from those in IAS 36 Impairment of Assets. distribution must be highly probable. [IFRS
However those differences were not addressed 5.12A]
in the short-term IASB-FASB convergence
project. Disposal group concept

Key provisions of IFRS 5 relating to assets held A 'disposal group' is a group of assets, possibly
for sale with some associated liabilities, which an entity
intends to dispose of in a single transaction. The
Held-for-sale classification measurement basis required for non-current
In general, the following conditions must be met assets classified as held for sale is applied to the
for an asset (or 'disposal group') to be classified group as a whole, and any resulting impairment
as held for sale: [IFRS 5.6-8] loss reduces the carrying amount of the non-
current assets in the disposal group in the order
management is committed to a plan to sell the of allocation required by IAS 36. [IFRS 5.4]
asset is available for immediate sale an active
programme to locate a buyer is initiated the sale Measurement
is highly probable, within 12 months of The following principles apply:
classification as held for sale (subject to limited
exceptions) the asset is being actively marketed At the time of classification as held for sale.
for sale at a sales price reasonable in relation to Immediately before the initial classification of
its fair value actions required to complete the the asset as held for sale, the carrying amount
plan indicate that it is unlikely that plan will be of the asset will be measured in accordance
significantly changed or withdrawn with applicable IFRSs. Resulting adjustments are
also recognised in accordance with applicable
The assets need to be disposed of through sale. IFRSs. [IFRS 5.18] After classification as held for
Therefore, operations that are expected to be sale. Non-current assets or disposal groups that
wound down or abandoned would not meet the are classified as held for sale are measured at
definition (but may be classified as discontinued the lower of carrying amount and fair value less
once abandoned). [IFRS 5.13] costs to sell (fair value less costs to distribute in
An entity that is committed to a sale involving the case of assets classified as held for
loss of control of a subsidiary that qualifies for distribution to owners). [IFRS 5.15-15A]
held-for-sale classification under IFRS 5 classifies Impairment.Impairment must be considered
both at the time of classification as held for sale scope of IFRS 9 Financial Instruments, non-
and subsequently: current assets measured at fair value in
accordance with IAS 41 Agriculture, and
At the time of classification as held for sale.
contractual rights under insurance contracts.
Immediately prior to classifying an asset or
[IFRS 5.5]
disposal group as held for sale, impairment is
measured and recognised in accordance with Presentation
the applicable IFRSs (generally IAS 16 Property,
Assets classified as held for sale, and the assets
Plant and Equipment, IAS 36 Impairment of
and liabilities included within a disposal group
Assets, IAS 38 Intangible Assets, and IAS 39
classified as held for sale, must be presented
Financial Instruments: Recognition and
separately on the face of the statement of
Measurement/IFRS 9 Financial Instruments).
financial position. [IFRS 5.38]
Any impairment loss is recognised in profit or
loss unless the asset had been measured at Disclosures
revalued amount under IAS 16 or IAS 38, in
which case the impairment is treated as a IFRS 5 requires the following disclosures about
revaluation decrease. After classification as held assets (or disposal groups) that are held for sale:
for sale. Calculate any impairment loss based on [IFRS 5.41]
the difference between the adjusted carrying description of the non-current asset or disposal
amounts of the asset/disposal group and fair group description of facts and circumstances of
value less costs to sell. Any impairment loss that the sale (disposal) and the expected timing
arises by using the measurement principles in impairment losses and reversals, if any, and
IFRS 5 must be recognised in profit or loss [IFRS where in the statement of comprehensive
5.20], even for assets previously carried at income they are recognised if applicable, the
revalued amounts. This is supported by IFRS 5 reportable segment in which the non-current
BC.47 and BC.48, which indicate the asset (or disposal group) is presented in
inconsistency with IAS 36. accordance with IFRS 8 Operating Segments
Assets carried at fair value prior to initial Disclosures in other IFRSs do not apply to assets
classification. For such assets, the requirement held for sale (or discontinued operations,
to deduct costs to sell from fair value may result discussed below) unless those other IFRSs
in an immediate charge to profit or loss. require specific disclosures in respect of such
Subsequent increases in fair value. A gain for assets, or in respect of certain measurement
any subsequent increase in fair value less costs disclosures where assets and liabilities are
to sell of an asset can be recognised in the profit outside the scope of the measurement
or loss to the extent that it is not in excess of requirements of IFRS 5. [IFRS 5.5B]
the cumulative impairment loss that has been
recognised in accordance with IFRS 5 or Key provisions of IFRS 5 relating to
previously in accordance with IAS 36. [IFRS 5.21- discontinued operations
22] No depreciation. Non-current assets or Classification as discontinuing
disposal groups that are classified as held for
sale are not depreciated. [IFRS 5.25] A discontinued operation is a component of an
entity that either has been disposed of or is
The measurement provisions of IFRS 5 do not classified as held for sale, and: [IFRS 5.32]
apply to deferred tax assets, assets arising from
employee benefits, financial assets within the
represents either a separate major line of Disclosures
business or a geographical area of operations is
The following additional disclosures are
part of a single co-ordinated plan to dispose of a
required:
separate major line of business or geographical
area of operations, or is a subsidiary acquired adjustments made in the current period to
exclusively with a view to resale and the amounts disclosed as a discontinued operation
disposal involves loss of control. in prior periods must be separately disclosed
[IFRS 5.35] if an entity ceases to classify a
IFRS 5 prohibits the retroactive classification as
component as held for sale, the results of that
a discontinued operation, when the
component previously presented in
discontinued criteria are met after the end of
discontinued operations must be reclassified
the reporting period. [IFRS 5.12]
and included in income from continuing
Disclosure in the statement of comprehensive operations for all periods presented [IFRS 5.36]
income

The sum of the post-tax profit or loss of the

discontinued operation and the post-tax gain or
loss recognised on the measurement to fair
value less cost to sell or fair value adjustments
on the disposal of the assets (or disposal group)
is presented as a single amount on the face of
the statement of comprehensive income. If the
entity presents profit or loss in a separate
statement, a section identified as relating to
discontinued operations is presented in that
separate statement. [IFRS 5.33-33A].

Detailed disclosure of revenue, expenses, pre-

tax profit or loss and related income taxes is
required either in the notes or in the statement
of comprehensive income in a section distinct
from continuing operations. [IFRS 5.33] Such
detailed disclosures must cover both the current
and all prior periods presented in the financial
statements. [IFRS 5.34]

Cash flow information

The net cash flows attributable to the operating,

investing, and financing activities of a
discontinued operation is separately presented
on the face of the cash flow statement or
disclosed in the notes. [IFRS 5.33]