IFRS 5 Non-current assets held for sale and Discontinued Operations
IFRS 5 determines how assets are classified in the financial statements once they become 'held for sale' or in the event of discontinued operations.
IFRS 5 requires:
- An asset or group of assets that will mainly be sold instead of being used is classified as held for sale.
- Measure assets held for sale at the lower of the carrying amount and fair value less costs to sell.
- The asset's depreciation ceases when it is held for sale.
- showing the asset and liabilities of a disposal group classified as held for sale separately in the financial statement.
- separate presentation in the statement of comprehensive income of the results of discontinued operations.
Standard history
In April 2001 the International Accounting Standards Board (Board) adopted IAS 35 Discontinuing Operations, which had originally been issued by the International Accounting Standards Committee in June 1998.
In March 2004 the Board issued IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations to replace IAS 35.
Other Standards have made minor consequential amendments to IFRS 5. They include Improvement to IFRSs (issued April 2009), IFRS 11 Joint Arrangements (issued May 2011), IFRS 13 Fair Value Measurement (issued May 2011), Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) (issued June 2011), IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013), IFRS 9 Financial Instruments (issued July 2014), Annual Improvements to IFRSs 2012–2014 Cycle (issued September 2014), IFRS 16 Leases (issued January 2016), IFRS 17 Insurance Contracts (issued May 2017) and Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018).
Source: IFRS.org
Frequently asked questions
How do you treat non-current assets held for sale
Non-current assets held for sale are valued at the lower of their book value or fair value minus selling costs.
How an asset classified as held for sale is accounted for as per IFRS 5
Assets held for sale are not depreciated. They are valued at the lower of their carrying amount or fair value minus costs to sell. These assets are shown separately in the financial statement. They are shown separately in the financial statement.
How do you compute for carrying value of non-current asset held for sale
We calculate the carrying value by subtracting the accumulated depreciation (for physical assets) or the amortization expense (for intangible assets, such as patents) from the original cost.
What is a non-current asset in IFRS
Assets that will not be converted to cash within 1 year and that will generate economic benefit into future periods.
What are the three types of non-current assets
Non-current assets fall under three major categories: tangible assets, intangible assets, and natural resources. Examples of non-current assets include investments, intellectual property, real estate, and equipment.
What is the difference between assets and non-current assets
Current assets are things a company plans to use or sell within a year. Non-current assets are things a company plans to keep for a long time and are not easy to sell quickly.
Are non-current assets good or bad
Such assets cannot be easily liquified within a year and are vital for a company's ongoing operations, expansion, and sustainability. Non-current assets are important for a company's balance sheet. They are long-term investments that help the company operate and grow in the future.
What are the risks of non-current assets
They can also indicate potential risks associated with a company's operations. For example, a company that relies heavily on non-current assets such as property or equipment may be more vulnerable to changes in the economy or industry trends that affect the demand for these assets.
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