non-current assets held for sale and discontinued operations.ppt

IFRS5 Non-current assets held for sale and discontinued operationsSyllabus C11abdContinued • Separate disclosure of material items of income and expense (called as exceptional items) is required. • Include the item in the income statement • Disclose the nature and amount in notes • Examples • Write-down of inventory to NRV • Write-down of PPE to recoverable amount • Restructuring • Gains/losses on disposal of non-current assets • Discontinued operations • Litigation settlements • Reversals of provisionsACCA F72Objective• IFRS 5 achieves substantial convergence with the requirements of US SFAS 144 Accounting for the Impairment or Disposal of Long-Lived Assets with respect to the timing of the classification of operations as discontinued operations and the presentation of such operations.F73Non-current assets held for sale• An entity may classify a non-current 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. • But the following conditions must be met for an asset (or 'disposal group') to be classified as held for sale.F74Continued • Management is committed to a plan to sell • Actions required to complete the plan indicate that it is unlikely that the plan for sale will be significantly changed or will be withdrawn • The asset is available for immediate sale • An active programme to locate a buyer is initiated • The sale is highly probable, and expected to be completed within 12 months of its classification as held for sale • The asset is being actively marketed for sale at a sales price reasonable in relation to its fair value F75Continued • Measurement – cease to be depreciated (note the period of depreciation) – at the lower of their previous carrying amount and their fair value less costs to sell – any impairment loss should normally be charged to SCI – an entity shall recognise a gain for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulate impairment loss that has been recognised. • Presentation – separately on the face of the SFP, among current assets.F76Test1, p264Continued • Disclosures – description of the non-current asset or disposal group – description of facts and circumstances of the sale (disposal) and the expected timing – impairment losses and reversals, if any, and where in the statement of comprehensive income they are recognised – if applicable, the reportable segment in which the non- current asset (or disposal group) is presented in accordance with IFRS 8 Operating Segments F77Discontinued Operation• A component of an enterprise that either has been disposed of, or is classified as held for sale – represents a separate major line of business or geographical area of operations – is part of a single co-ordinated plan of disposal, or – is a subsidiary acquired exclusively with a view to resale.F78Continued • A component of an enterprise – comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. – will have been a cash-generating unit or a group of cash -generating units while being held for use.F79Presentation in SCI • on the face, a single amount must be disclosed, comprising the total of: – the post-tax profit or loss of discontinued operations, and – the post-tax gain or loss recognised on the measurement to fair value less costs to sell, or on the disposal, of the assets constituting the discontinued operation.F710Continued • an analysis must be presented on the face or in notes, with separate columns for continuing operations, discontinued operations, and total. – the revenue, expenses and pre-tax profit or loss of discontinued operations – the related income tax expense– the gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation – the related income tax expenseF711Test2, p267Presentation in SCF• the net cash flows attributable to the operating, investing and financing activities of discontinued operations must be disclosed on the face or in notes.F712Additional disclosure• a description of the non-current asset (or disposal group) • a description of the facts and circumstances of the sale, or leading to the expected disposal, and the expected manner and timing of that disposal. • the industry and geographical segment in which the non-current asset (or disposal group) is presented.F713Exercises • Dec10 5 • Dec06 5a • Dec03 2note(vi) • Pilot01 5cF714。