IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations

3 Measurement of non-current assets held for sale

An entity shall measure a non-current asset (or disposal group) classified as held for sale at the lower of its carrying amount and fair value less costs to sell.

If the asset (or disposal group) is acquired as part of a business combination, it shall be measured at fair value less costs to sell.

When the sale is expected to occur beyond one year, the entity shall measure the costs to sell at their present value. Any increase in the present value of the costs to sell that arises from the passage of time (unwinding of discount) shall be treated as finance cost and reported in profit and loss.

Immediately before the initial classification of asset as held for sale, its carrying amount should be measured in accordance with applicable IFRSs. For example asset will be first measured under IAS 16 and then this carrying amount i.e. cost will be used for measurement purposes in classification as held for sale

An entity shall recognise an impairment loss for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell

An entity shall recognise gain for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognised either in accordance with this IFRS or previously in accordance with IAS 36

The adjustments of impairment loss or reversals in carrying amount of a disposal group shall be recognized in the order specified in IAS 36.

A gain or loss not previously recognised by the date of the sale of a non-current asset (or disposal group) shall be recognised at the date of derecognition.

An entity shall not depreciate (or amortise) a non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale.

Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale shall continue to be recognised.

4 Changes to sale plan

If an entity has classified an asset (or disposal group) as held for sale, but the criteria are no longer met, the entity shall cease to classify the asset (or disposal group) as held for sale.

The entity shall measure a non-current asset that ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) at the lower of:

1. its carrying amount adjusted for depreciation, amortization or revaluation had it not been classified as held for sale. and
2. its recoverable amount at the date of the subsequent decision not to sell.

The adjustments to the carrying amount of the asset that ceases to be classified as held for sale shall be included in profit and loss from continuing operations.