– The modules include worked examples to illustrate aspects of the standards in action. Dear Silvia, thank you for the great articles! Start studying IFRS 5 - Non-Current Assets held for Sale and Discontinued Operations. I simply love you mam! So if i understood correctly, then i shall only disclose the profit/loss from discontinued operation separately in PL and do not classify its assets as separate line of item in SOFP, if i do not intend to sell them. The contract was signed on January 5, 2017. It is completely separated from the business the company is usually in. One relating to Health etc; We are hoping to find a suitable buyer for this sub-division once the economy has recovered. Regards. IFRS 15 Praktische handvatten IFRS 15 - Revenue Recognition. 2. IAS 16 outlines the accounting treatment for most types of property, plant and equipment. Are they linked together or not? Or the opposite situation. Therefore, you need to test assets for any impairment and at the same time, you need to present them separately from continuing operations in your financial statements (well, if a company plans to close one part of a business). Hi Max, I explained the link between NCA held for sale and discontinued operations above, in my reply to Hesham – I would be just repeating what I wrote there. None of the buyers indicated that the price is too high. Non-current assets that are measured at fair value less costs to sell in accordance with IAS 41 Agriculture. Is part of a plan to dispose it of, or The company abandon the operation before the start of business and end up in paying compensation for the landlord from whom the building is to be leased. Thank you. Related to the topic, I have a question relating to the accounting for other side, when a company has discontinued operation or a disposal group, however instead of selling it company decides to create a separate entity (with same shareholders) and give this assets to that company (demerger of a sort however, the assets/liabilities in a new company were classified as discontinued operations), can you reference me what the accounting in the new entity for this assets/liabilities/equity should be. I understand your confusion. Ifrs 5 1. And now, in 2016, you don’t have any discontinued operation as it’s gone, so you’re asking how to present 2015? Management has not changed the intention to sell the PPE after December 31, however, it does not seek for a buyer anymore actively. Q2: Do I need to present discontinued operation if i want to prepare Interim Condensed financial information for Q3 as of Septmber 30, 2018 or is this represent disposal such as any disposal in assets? It’s an exercise, but you need it for your notes. The reason is that by 31 December 2016, you have already got the sufficient evidence that the fair value of a hotel is much higher than its carrying amount. Understand basic accounting terminology. Dear Silvia, The only exception is when a company regularly sells assets normally considered as non-current. You are contributing more. Hi SIlvia. I would like to discuss the difference between the assets held for sale and the discontinued operations. When you stop some operation, maybe you will have some assets held for sale in there. Now, would there be any change in treatment? You depreciate carrying amount (that is AFTER recognizing an impairment) over remaining useful life. Liabilities related to plant-1/7/2017 4 650 000 The price was higher than what was estimated in 2015, therefore the quesiton is, whether impairment reversal should/could already be recognised in 2016? The properties were all sold in the this year and the transaction was only known about a month before it happened., hence we never moved them to held for sale in the prior year Financial Statements. your contribution is remarkable and unforgettable is only GOD will reward you for that, i will be happy if you can help me with CD lecture. Hi Asad, if you stopped operations in that division, then yes, it’s a discontinued operation and you should report it separately from other assets. I know that there are two separate components: 1. if consultancy fees and professional fees relate directly to the sale of your asset, then yes, these should be taken into account when estimating asset’s FV less cost to sell. We hope that you found a course that will help you meet your learning goals. That’s the main measurement principle of IFRS 5. The magazine division comprises a number of subdivisions. The standard IFRS 5 lists some measurement exceptions and you can read about them in the later paragraphs, but you still need to present and disclose the information about these assets under IFRS 5. IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations . Well, Fahim, what advice do you need? These are illustrative IFRS financial statements of a listed company, prepared in accordance with International Financial Reporting Standards. hi Ebarume, no, this will be treated as a change in a group composition. Dear Silvia, thank you. S. Hi Silvia, congratulation for your website and thank you for your contribution, I have a doubt, when a company plan to close, can I present PPE as a assets held for sale? IFRS seems to speak about the comprehensive income statement only. Revenue Recognition – IFRS 15 & ASC 606 discusses the newly introduced Revenue Standard – IFRS 15 and ASC 606 and sheds light on practical application issues. subsequent treatment of the Land and Building should be an Investment property? Should the property, plant and equipment be classified as held for sale as of December 31? Be careful, because when a company plans to finish the closure within 1 year, then it’s NOT a going concern. First 9 months were consolidated and last 3 months reported under IFRS 5 as discontinued. Dear Silvia, The fair value was estimated again, company actively searched for a buyer etc. So, profit/loss on the disposal and all other revenues and expenses of discontinued operations enter to one single amount (i.e. The 110 comes in, you relieve the assets held for sale of 100, what about the 10. This course aims at imparting knowledge on how to understand and apply the fundamental concepts and principles of IFRS across accounting standards. a company bought demolished factory (land, buildings, equipment), with the intention to reorganize the business and start the production again. S. Thanks for this wonderful article.It really made my day. A quick one, if a disposal group is held for sale in year 2017 and assets and liabilities presented as a separate line in the financial position, what happen to comparative year 2016, are we going to retrospectively classify in 2016 too? Or in other words, should both NCA held for sale and discontinued operations go hand in hand? Dear Silvia, Op deze pagina vindt u IFRS-gerelateerde content zoals artikelen over IFRS-standaarden, de verschillenanalyses NL-GAAP/IFRS en door ons ontwikkelde tools. operation as per IAS 12.81h and IFRS5 33.b.How to split current tax as well?,current and comparative year.Thank you everyone. Learn vocabulary, terms, and more with flashcards, games, and other study tools. A full year Subsidiary met Held For Sale requirements From Oct 1. I was wondering, if a company sells a (significant) subsidiary within the year and had no plans to in prior year: it has not been classified as held for sale in prior year’s financial statements. What will be the income earned from the sale of vehicles? 1-6. The reason is that you need to present the elements of total comprehensive income separately and that affects the equity, too. Thank you! yes, of course. These illustrative IFRS financial statements are intended to be used as a source of general technical reference, as they show suggested disclosures together with their sources. If you run a car business and you sold 8 cars for R80000 each, 15% vat inclusive. Ahsan, There are pros and cons to both approaches, depending on how they are used. Things are clear now. Moreover, you can practice lots real examples to the life to improve effectively your knowledge and … It is a component of an entity (understand: a cash-generating unit or a group of cash-generating units) that either has been disposed of or is classified as held for sale, and at the same time: Once you identify a discontinued operation, you should present it separately from other continuing operations in your financial statements. thank you for your comment. Investments (1/07/2017)(fair value) 15 000 000 Please explain. View Test Prep - Kieso_IFRS_TestBank_Ch05 from ACCT 5160 at HKU. The chart of accounts is a special ledger used in accounting systems. Markup is 45% on cost. Books, 2.Online news platform and, 3. In line with IFRS 5, we are to present the assets and liabilities of subsidiary held for sale as one line. Please could you assist. Is this mandatory in case of discontinued operations? there is a plan, asset is marketed etc.). So far we have served 1.2 Million+ satisfied learners and counting. Back to Course Next Lesson. Outline the accounting treatment for the group assets in terms of IFRS 5 on 30/06/2018, if an assets is sold on going concern basis eg running business . In this case, you would recognize any impairment loss in profit or loss, but sometimes also in other comprehensive income – that’s when you apply revaluation model for your property, plant and equipment and you have a revaluation surplus to decrease. Your article has indeed elevated my knowledge of IFRS 5. since the company doesn’t use it anymore, does it remain on the book and get depreciated? Assets held for sale – on top of disclosures, you need to measure them at fair value less cost to sell. added to thh operating costs of these properties for the 6 months they operated?) and recognize loss under discontinued operation in income statement? The question is whether you should classify a non-current asset as held for sale in the case when you plan to stop using it, or abandon it. Does it make any sense? Your explanations are fantastic and very enlightening. Keep it up . Likewise, i want to sell a CGU which is not discontinued but running in loss, i hv to present its asset separately in SOFP as Classified as HFS, but do not give separate disclosure of its Profit/loss in PL? But, it also means, that you WILL need to assess the criteria for presenting the abandoned asset or operation as discontinued operation. In my opinion, I would leave revaluation surplus as it is until asset is derecognized. (IFRS 5.32), The post-tax profit or loss of discontinued operations, and. 1. Assuming that it meets the criteria of NCA held of sale. redundancy payments as a result of the restructure but not directly related to the. If you plan to sell the whole division, then you have a disposal group held for sale. or can we just write off the whole asset? Let me point out that you should apply IFRS 5 for all non-current assets – no exception. IFRS 5 Non-cash Assets Held for Sale and Discontinued Operations The Board has not undertaken any specific implementation support activities relating to this Standard. Hi DB, Because, you will recover its carrying amount through asset’s continuing use and not sale. It enters into the gain/loss on derecognition, i.e. But, it is not a discontinued operation in this case, because it is not a component of an entity – it’s just an asset. Thank you for your effort. An entity has agreed in a directors’ meeting to sell a building, and has tentatively started looking for a buyer for the building. or as an impairment. You recognize the impairment loss first. In 2015 we decided to sell a hotel and recognised it as asset held for sale. Try a free IFRS 15 Revenue from Contracts with Cutomers quiz and test your knowledge. Test Bank for Intermediate Accounting: IFRS Edition 10 - 10 33. Thank you for your view. Another Q, if a segment at our company would be sold in the next year and there is a plan for the sale and other conditions are met, will be classified as held for sale or discontinued operations? Shortly before starting the IFRS Certificate Program, I spent several months working on GAAP to IFRS issues for the first time in my career. Explanations are really great. However, at the same time, if you are not going to sell the division, it is NOT classified as held for sale and not accounted for as such. 036: Contract asset vs. account receivable, It specifies the accounting treatment for, It sets the presentation and disclosure requirements for. I’m not sure I got it fully. After business transfer subsidiary is not having any business. -Udemy’s IFRS courses come with Certificate of Completion. Hi I would like how to account the asset held for sale if the sale is not yet completed during the following year. I have an unlisted publisher company, revenue is driven from 1. Deze pagina is een NL-extensie van de internationale IFRS-website van Deloitte: www.iasplus.com waarin onze global IFRS content is opgenomen. When a company (or another entity) plans to sell an asset and / or stop some part of its business, then it might affect its future cash flows, profitability and overall financial situation. We wish you Happy Learning! -Joshua McIntyre. Solution manual for Intermediate Accounting IFRS Edition 2nd Edition kieso. All Rights Reserved. Now, if you plan to sell machinery of this division, then you have assets held for sale. You can have an NCA without considering it “discontinued operation”. S. Hi Silvia, Illustrate aspects of the group remains, continued by that last subsidiary and its carrying and. 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