Can asset be classified as ‘held for sale’ if not sold within one year?


International Financial Reporting Standard – IFRS 5: Non-current Assets Held for Sale and Discontinued Operations recognize the fact that events and circumstances may cause the sale of asset to be delayed beyond one year.

However, this will not prevent the entity to classify asset as held for sale IF:

  • the events were beyond entity’s control;
  • and entity is still committed to sell the asset.

However, according to IFRS 5, this exception is only available if the events and circumstances causing delay are arisen in the following situations:

  1. Expected conditions on transfer of asset
    The date when sale of non-current asset was committed it was expected that parties other than buyer will impose condition on transfer of asset. To respond such conditions a firm purchase commitment is required which is highly probable within in one year
  2. Unexpected conditions on transfer
    A firm purchase commitment was obtained but still buyer or others imposed conditions on transfer of non-current asset. However, actions have been taken in response to conditions on timely basis and a favourable resolution to factors causing delay is expected
  3. Unlikely situations
    During initial one-year period unlikely situations have arisen due to which asset held for sale is not sold by the end of the period. However, necessary actions have been taken in response to changing circumstances and asset. The asset is still available for immediate sale is being actively marketed at a price reasonable in the changed circumstances and the sale is highly probable.

ACCA F7 students should consult our FREE ACCA F7 Study Notes to learn in detail about examinable areas of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations