DOCSLIB.ORG

A Roadmap to Impairments and Disposals of Long-Lived Assets and Discontinued Operations

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
A Roadmap to Impairments and Disposals of Long-Lived Assets and Discontinued Operations A Roadmap to Impairments and Disposals of Long-Lived Assets and Discontinued Operations October 2020 The FASB Accounting Standards Codification® material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances. As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Copyright © 2020 Deloitte Development LLC. All rights reserved. Publications in Deloitte’s Roadmap Series Business Combinations Business Combinations — SEC Reporting Considerations Carve-Out Transactions Comparing IFRS Standards and U.S. GAAP Consolidation — Identifying a Controlling Financial Interest Contingencies, Loss Recoveries, and Guarantees Contracts on an Entity’s Own Equity Convertible Debt Current Expected Credit Losses Distinguishing Liabilities From Equity Earnings per Share Environmental Obligations and Asset Retirement Obligations Equity Method Investments and Joint Ventures Equity Method Investees — SEC Reporting Considerations Fair Value Measurements and Disclosures (Including the Fair Value Option) Foreign Currency Transactions and Translations Guarantees and Collateralizations — SEC Reporting Considerations Impairments and Disposals of Long-Lived Assets and Discontinued Operations Income Taxes Initial Public Offerings Leases Noncontrolling Interests Non-GAAP Financial Measures and Metrics Revenue Recognition SEC Comment Letter Considerations, Including Industry Insights Segment Reporting Share-Based Payment Awards Statement of Cash Flows iii Contents Preface ix Contacts x Chapter 1 — Overview and Scope 1 1.1 Overview 1 1.2 OverviewoftheAccountingandReportingforLong-LivedAssetsandDiscontinuedOperations 1 1.2.1 Long-Lived Assets Classified as Held and Used 3 1.2.2 Long-Lived Assets to Be Disposed of by Sale 3 1.2.3 Long-Lived Assets to Be Disposed of Other Than by Sale 3 1.2.4 Discontinued Operations 4 1.2.5 Presentation and Disclosure Requirements for Disposals That Are Not Discontinued Operations 4 1.2.6 Presentation and Disclosure Requirements for Disposals That Are Discontinued Operations 4 1.2.7 Reporting Considerations for SEC Registrants 5 1.3 ScopeofASC360-10—ImpairmentorDisposalofLong-LivedAssets 5 1.4 ScopeofASC205-20—PresentingDiscontinuedOperations 9 Chapter2—Long-LivedAssetsClassifiedasHeldandUsed 11 2.1 Overview 11 2.2 WhentoTestaLong-LivedAsset(AssetGroup)forRecoverability 12 2.3 GroupingLong-LivedAssetsClassifiedasHeldandUsed 13 2.3.1 Entity-Wide Assets 16 2.3.2 Goodwill in Asset Groups 17 2.3.3 Debt and Other Liabilities in Asset Groups 18 2.3.4 Right-of-Use Assets and Lease Liabilities in Asset Groups 18 2.3.4.1 Entity Is a Lessee in a Finance Lease 19 2.3.4.2 Entity Is a Lessee in an Operating Lease 19 2.3.5 Deferred Taxes in Asset Groups 21 2.3.6 Foreign Currency Translation in Asset Groups 21 2.3.7 Order of Impairment Testing When an Asset Group Is Held and Used 22 2.3.8 Changes in Asset-Group Determinations 24 iv Contents 2.4 TestingLong-LivedAssetsforRecoverability 24 2.4.1 Estimates of Future Cash Flows Used to Test Long-Lived Assets for Recoverability 25 2.4.1.1 Estimates of Future Cash Flows Are Undiscounted and Based on the Entity’s Expected Use of the Asset Group 25 2.4.1.2 Estimates of Future Cash Flows Arising From the Eventual Disposition of the Asset Group 26 2.4.1.3 Estimates of Future Cash Flows Should Be Reasonable 26 2.4.1.4 Interest Charges 28 2.4.2 Cash Flow Estimates Based on Facts and Circumstances That Exist as of the Testing Date 28 2.4.3 Probability-Weighted and Best-Estimate Cash Flow Approaches 29 2.4.4 Primary Asset and the Cash Flow Estimation Period 33 2.4.5 Expenditures for Assets That Are in Use 34 2.4.6 Expenditures for Assets That Are Under Development 35 2.4.7 Certain Site Restoration and Environmental Exit Costs 37 2.4.8 Assets Subject to Asset Retirement Obligations 40 2.5 MeasurementofanImpairmentLoss 41 2.5.1 Determining the Fair Value of an Asset Group 41 2.5.1.1 Exit Price 42 2.5.1.2 Unit of Valuation Versus Unit of Account 42 2.5.1.3 Highest and Best Use 42 2.5.1.4 Market Participants 43 2.5.1.5 Principal (or Most Advantageous) Market 43 2.5.1.6 Valuation Techniques 43 2.5.2 Assets Subject to Nonrecourse Debt 43 2.5.3 Allocating an Impairment Loss to the Assets in the Asset Group 44 2.6 AdjustedCarryingAmountBecomesNewCostBasis 46 2.7 DepreciationandAmortizationEstimates 48 2.8 AssetsThatProvideNoFutureBenefit 50 2.9 PresentationofanImpairmentLoss 50 2.10 DisclosuresRelatedtoRecognitionofanImpairmentLoss 51 2.11 Early-WarningDisclosuresWhenFutureImpairmentsAreReasonablyPossible 52 Chapter3—Long-LivedAssetstoBeSold 54 3.1 Overview 54 3.2 GroupingAssetstoBeSold 54 3.3 Held-for-SaleCriteria 55 3.3.1 Management, Having the Authority to Approve the Action, Commits to a Plan 55 3.3.2 Available for Immediate Sale in Its Present Condition 56 3.3.3 An Active Program to Locate a Buyer and Other Actions Required to Complete the Plan Have Been Initiated 58 3.3.4 The Sale Is Probable and Is Expected to Be Complete Within One Year 58 3.3.5 Actively Marketed at a Reasonable Price 61 3.3.6 Unlikely That Significant Changes Will Be Made to the Plan or the Plan Will Be Withdrawn 61 v Deloitte | A Roadmap to Impairments and Disposals of Long-Lived Assets and Discontinued Operations (2020) 3.4 IncludingSpecificItemsinaDisposalGroup 62 3.4.1 Goodwill 62 3.4.2 Cumulative Translation Adjustment and Other Items of Accumulated Other Comprehensive Income 64 3.5 MeasuringtheCarryingValueofaDisposalGroupUponClassificationasHeldforSale 64 3.5.1 Order of Impairment Testing When a Disposal Group Is Held for Sale 66 3.5.2 Measuring the Fair Value of a Disposal Group 67 3.5.3 Costs to Sell 68 3.5.4 Loss That Exceeds the Carrying Amount of Long-Lived Assets Within the Disposal Group 68 3.5.5 Newly Acquired Long-Lived Assets 69 3.6 SubsequentMeasurementWhileaDisposalGroupIsClassifiedasHeldforSale 70 3.6.1 Depreciation and Amortization 70 3.7 Long-LivedAssetstoBeDisposedofinExchangeforNoncashAssetsinaTransaction AccountedforatFairValue 71 3.8 RecognitionofaGainorLossUponSaleoftheDisposalGroup 71 3.9 ChangestoaPlanofSale 74 3.10 ConsiderationofSubsequentEventsforAssessingHeld-for-SaleClassification 75 Chapter4—Long-LivedAssetstoBeDisposedofOtherThanbySale 77 4.1 Overview 77 4.2 AssetstoBeAbandoned 77 4.3 ANonmonetaryExchangeMeasuredontheBasisoftheRecordedAmountofthe AssetsRelinquished 79 4.4 AssetstoBeDistributedtoOwnersinaSpin-Off 79 Chapter5—DiscontinuedOperations 83 5.1 Overview 83 5.2 CriteriaforReportingaDiscontinuedOperation 83 5.2.1 Component of an Entity 84 5.2.2 Strategic Shift That Has (or Will Have) a Major Effect 85 5.3 DisposalsThatOccurOverMultipleReportingPeriods 89 5.4 NormallyOccurringDisposals 89 5.5 ContinuingInvolvement 90 5.6 ABusinessorNonprofitActivityClassifiedasHeldforSaleUponAcquisition 91 5.7 ConsiderationofSubsequentEventsforAssessingDiscontinued-OperationsPresentation 91 Chapter6—PresentationandDisclosureRequirementsforDisposalsThatAreNot ReportedasDiscontinuedOperations 92 6.1 Overview 92 6.2 BalanceSheetPresentationforAssets(DisposalGroups)ClassifiedasHeldforSaleThatAreNot DiscontinuedOperations 92 6.3 IncomeStatementPresentationforDisposalsThatAreNotDiscontinuedOperations 93 6.3.1 Income Statement Presentation for Real Estate Investment Trusts 93 vi Contents 6.4 DisclosuresforDisposalsThatAreNotDiscontinuedOperations 94 6.5 DisclosuresforIndividuallySignificantAssets(DisposalGroups)ThatAreNot DiscontinuedOperations 95 6.6 FlowchartIllustratingtheRequiredDisclosuresforAssets(DisposalGroups)ThatAre NotDiscontinuedOperations 96 Chapter7—PresentationandDisclosureRequirementsforDisposalsThat AreReportedasDiscontinuedOperations 98 7.1 Overview 98 7.2 BalanceSheetPresentationofDiscontinuedOperations 98 7.3 IncomeStatementPresentationofDiscontinuedOperations 102 7.4 PresentationofIncomeStatementItemsinDiscontinuedOperations 104 7.4.1 Asset Impairment Charges 104 7.4.2 Adjustments to Amounts Previously Reported in Discontinued Operations 104 7.4.2.1 Classification and Disclosure of Contingencies 104 7.4.2.2 Settlement of Employee Benefit Plan Obligations 106 7.4.3 Allocation of Interest to Discontinued Operations 107 7.4.4 Allocating Direct Expenses (but Not Indirect Expenses) to Discontinued Operations 107 7.4.5 Allocating the Cost of Shared Assets to Discontinued Operations 108 7.4.6 Intercompany Sales Between an Entity and a Discontinued
Load more

Recommended publications
  • U.S. GAAP Vs. IFRS: Long-Lived Assets Held for Sale and Discontinued Operations
    U.S. GAAP vs. IFRS: Long-lived assets held for sale and discontinued operations Prepared by: Richard Stuart, Partner, National Professional Standards Group, RSM US LLP [email protected], +1 203 905 5027 July 2020 Introduction Currently, more than 120 countries require or permit the use of International Financial Reporting Standards (IFRS), with a significant number of countries requiring IFRS (or some form of IFRS) by public entities (as defined by those specific countries). Of those countries that do not require use of IFRS by public entities, perhaps the most significant is the U.S. The U.S. Securities and Exchange Commission (SEC) requires domestic registrants to apply U.S. generally accepted accounting principles (GAAP), while foreign private issuers are allowed to use IFRS as issued by the International Accounting Standards Board (which is the IFRS focused on in this comparison). While the SEC continues to discuss the possibility of allowing domestic registrants to provide supplemental financial information based on IFRS (with a reconciliation to U.S. GAAP), there does not appear to be a specified timeline for moving forward with that possibility. Although the SEC currently has no plans to permit the use of IFRS by domestic registrants, IFRS remains relevant to these entities, as well as private companies in the U.S., given the continued expansion of IFRS use across the globe. For example, many U.S. companies are part of multinational entities for which financial statements are prepared in accordance with IFRS, or may wish to compare themselves to such entities. Alternatively, a U.S. company’s business goals might include international expansion through organic growth or acquisitions.
    [Show full text]
  • IAS 7 STATEMENT of CASH FLOWS Contents 1
    IFRS IN PRACTICE 2019-2020: IAS 7 STATEMENT OF CASH FLOWS Contents 1. Introduction 4 2. Definition of cash and cash equivalents 5 2.1. Demand deposits 5 2.2. Short term maturity 6 2.3. Investments in equity instruments 6 2.4. Changes in liquidity and risk 6 2.5 Cryptocurrencies 6 2.6 Short-term credit lending and cash and cash equivalent classification 7 3. Restricted cash and cash equivalent balances – disclosure requirements 8 3.1. Interaction with IAS 1 8 4. Classification of cash flows as operating, investing or financing 9 4.1. Operating activities 9 4.2. Investing activities 9 4.3. Financing activities 9 4.3.1. Disclosure of changes in liabilities arising from financing activities 10 4.4. Classification of interest and dividends 10 4.5. Common classification errors in practice 11 5. Offsetting cash inflows and outflows in the statement of cash flows 13 5.1. Effect of bank overdrafts on the carrying amount of cash and cash equivalents 13 5.2. Refinancing of borrowings with a new lender 14 6. Presentation of operating cash flows using the direct or indirect method 15 7. Income taxes and sales taxes 16 8. Foreign exchange 17 8.1. Worked example – foreign currency translation 17 9. Group cash pooling arrangements in an entity’s separate financial statements 20 10. Securities and loans held for dealing or trading 22 11. Classification of cash flows arising from a derivative used in an economic hedge 23 12. Revenue from Contracts with Customers 24 13. Leases 25 13.1. Payments made on inception of a lease 25 13.2.
    [Show full text]
  • A Roadmap to the Preparation of the Statement of Cash Flows
    A Roadmap to the Preparation of the Statement of Cash Flows May 2020 The FASB Accounting Standards Codification® material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances. As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Copyright © 2020 Deloitte Development LLC. All rights reserved. Publications in Deloitte’s Roadmap Series Business Combinations Business Combinations — SEC Reporting Considerations Carve-Out Transactions Comparing IFRS Standards and U.S.
    [Show full text]
  • IFRS Example Consolidated Financial Statements 2019
    IFRS Assurance IFRS Example Global Consolidated Financial Statements 2019 with guidance notes Contents Introduction 1 19 Cash and cash equivalents 61 IFRS Example Consolidated Financial 3 20 Disposal groups classified as held for sale and 61 Statements discontinued operations Consolidated statement of financial position 4 21 Equity 63 Consolidated statement of profit or loss 6 22 Employee remuneration 65 Consolidated statement of comprehensive income 7 23 Provisions 71 Consolidated statement of changes in equity 8 24 Trade and other payables 72 Consolidated statement of cash flows 9 25 Contract and other liabilities 72 Notes to the IFRS Example Consolidated 10 26 Reconciliation of liabilities arising from 73 Financial Statements financing activities 1 Nature of operations 11 27 Finance costs and finance income 73 2 General information, statement of compliance 11 28 Other financial items 74 with IFRS and going concern assumption 29 Tax expense 74 3 New or revised Standards or Interpretations 12 30 Earnings per share and dividends 75 4 Significant accounting policies 15 31 Non-cash adjustments and changes in 76 5 Acquisitions and disposals 33 working capital 6 Interests in subsidiaries 37 32 Related party transactions 76 7 Investments accounted for using the 39 33 Contingent liabilities 78 equity method 34 Financial instruments risk 78 8 Revenue 41 35 Fair value measurement 85 9 Segment reporting 42 36 Capital management policies and procedures 89 10 Goodwill 46 37 Post-reporting date events 90 11 Other intangible assets 47 38 Authorisation
    [Show full text]
  • IFRS-5: Non-Current Assets Held for Sale and Discontinued Operations International Financial Reporting Standard 5 (IFRS 5) Deemed to Be Discontinued
    “The journal is running a series of updates on IFRS, IAS, IFRIC and SIC. The updates mostly collected from different sources of IASB publication, seminars, workshop & IFRS website. This issue is based on IFRS 5 which has been collected, collated & summarized by Mr. Md. Mahabubul Alam FCMA. He has been working as First Assistant Vice President for Al Arafah Islami Bank Limited. He is a fellow member of the Institute of Cost & Management Accountants of Bangladesh.” IFRS-5: Non-current Assets Held for Sale and Discontinued Operations International Financial Reporting Standard 5 (IFRS 5) deemed to be discontinued. It is possible to have a Non-current Assets Held for Sale and Discontinued discontinued operation which has no assets held for Operations deals with the measurement and sale. Similarly it is possible to have assets held for presentation in the statement of financial position sale without discontinuing an operation. They can of non-current assets (and disposal groups) held for also occur together. sale. In particular, the IFRS requires assets that meet In this article, we only highlight “Non-current the criteria to be classified as held for sale to be: assets held for sale” section of IFRS-5. a) Measured at the lower of carrying amount and fair value less costs to sell, and depreciation on Classification and Presentation Requirements such assets to cease; and The classification and presentation requirements of b) Presented separately in the statement of IFRS 5 apply to all recognized non-current assets financial position and the results of discontinued and disposal groups of an entity, but certain assets operations to be presented separately in the are not subject to its measurement requirements statement of comprehensive income.
    [Show full text]
  • IFRS 5 International Financial Reporting Standards (Ifrss
    IFRS 5 International Financial Reporting Standards (IFRSs) together with their accompanying documents are issued by the International Accounting Standards Board (IASB): 30 Cannon Street, London, EC4M 6XH, United Kingdom. Tel: +44 (0)20 7246 6410 Fax: +44 (0)20 7246 6411 Email: [email protected] Web: www.ifrs.org Copyright © 2004 IFRS Foundation IFRSs (which include International Accounting Standards and Interpretations) are copyright of the IFRS Foundation. The authoritative text of IFRSs is that issued by the IASB in the English language. Copies may be obtained from the IFRS Foundation Publications Department. Please address publication and copyright matters to: IFRS Foundation Publications Department 30 Cannon Street, London, EC4M 6XH, United Kingdom. Tel: +44 (0)20 7332 2730 Fax: +44 (0)20 7332 2749 Email: [email protected] Web: www.ifrs.org All rights reserved. No part of this publication may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without prior permission in writing from the IFRS Foundation. The IFRS Foundation logo, the IASB logo, the IFRS for SMEs logo, the ‘Hexagon Device’, ‘IFRS Foundation’, ‘eIFRS’, ‘IAS’, ‘IASB’, ‘IASC Foundation’, ‘IASCF’, ‘IFRS for SMEs’, ‘IASs’, ‘IFRS’, ‘IFRSs’, ‘International Accounting Standards’ and ‘International Financial Reporting Standards’ are Trade Marks of the IFRS Foundation © IFRS Foundation 1 IFRS 5 Approval by the Board of IFRS 5 issued in March 2004 International Financial Reporting Standard 5 Non-current Assets Held for Sale and Discontinued Operations was approved for issue by twelve of the fourteen members of the International Accounting Standards Board.
    [Show full text]
  • Revenue from Contracts with Customers a Guide to IFRS 15
    Revenue from Contracts with Customers A guide to IFRS 15 March 2018 This guide contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this guide, rendering professional advice or services. Before making any decision or taking any action that might affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this guide. © 2018. For information, contact Deloitte Touche Tohmatsu Limited. Extracts from International Financial Reporting Standards and other International Accounting Standards Board material are reproduced with the permission of the IFRS Foundation. Revenue from Contracts with Customers | A guide to IFRS 15 Foreword Foreword The IASB’s Standard IFRS 15 Revenue from Contracts with Customers is now effective (for periods beginning on or after 1 January 2018 with earlier adoption permitted). It is imperative that entities take time to consider the impact of the new Standard. In some cases, IFRS 15 will require significant changes to systems and may significantly affect other aspects of operations. (e.g. internal controls and processes, KPIs, compensation and bonus plans, bank covenants, tax etc.). This guide is intended to assist preparers and users of financial statements to understand the impact of IFRS 15. We begin with a high-level executive summary of the new requirements, followed by a specific focus on the important issues and choices available for entities on transition to the new Standard.
    [Show full text]
  • IAS Plus Guide to IFRS 5 Assets Held for Sale and Discontinued Operations
    22976 bd AssetsHeld:22976 AssetsHeld bd 7/3/08 16:52 Page a Audit Assets held for sale and discontinued operations A guide to IFRS 5 An IAS Plus guide March 2008 Audit.Tax.Consulting.Financial Advisory. 22976 bd AssetsHeld:22976 AssetsHeld bd 7/3/08 16:52 Page b Contacts Global IFRS leadership team IFRS global office Global IFRS leader Ken Wild [email protected] IFRS centres of excellence Americas D.J. Gannon [email protected] Asia Pacific Hong Kong Melbourne Stephen Taylor Bruce Porter [email protected] [email protected] Europe-Africa Copenhagen Johannesburg London Paris Jan Peter Larsen Graeme Berry Veronica Poole Laurence Rivat [email protected] [email protected] [email protected] [email protected] Deloitte’s www.iasplus.com website provides comprehensive information about international financial reporting in general and IASB activities in particular. Unique features include: • daily news about financial reporting globally. • summaries of all Standards, Interpretations and proposals. • many IFRS-related publications available for download. • model IFRS financial statements and checklists. • an electronic library of several hundred IFRS resources. • all Deloitte Touche Tohmatsu comment letters to the IASB. • links to several hundred international accounting websites. • e-learning modules for each IAS and IFRS – at no charge. • complete history of adoption of IFRSs in Europe and information about adoptions of IFRSs elsewhere around the world. • updates on developments in national accounting standards. 22976 bd AssetsHeld:22976 AssetsHeld bd 7/3/08 16:52 Page c Contents 1. Introduction 1 2. Scope 2 2.1 Classification and presentation requirements 2 2.1.1 Non-current assets 2 2.1.2 Disposal groups 2 2.2 Measurement requirements 3 2.2.1 ‘Scoped-out’ non-current assets 3 2.2.2 Current assets 4 3.
    [Show full text]
  • IFRS 5 Global News Alert
    April 2004 – Special Edition Assurance & Advisory IAS Plus. Published for our clients and staff throughout the world IASB Publishes IFRS 5 Non-current Assets Deloitte global IFRS leadership team Held for Sale and Discontinued Operations IFRS global office The International Accounting Standards Board (IASB) issued International Financial Reporting Standard (IFRS) 5 Non-current Assets Held for Sale and Discontinued Operations on Global IFRS Leader 31 March 2004. IFRS 5 replaces IAS 35 Discontinuing Operations (thereby amending certain Ken Wild of its requirements) and creates a “held for sale” category for non-current assets. [email protected] Summary of IFRS 5 Requirements IFRS centres of excellence Americas Definition of a Very much the same as the definition in D. J. Gannon discontinued operation IAS 35. [email protected] Asia-Pacific Timing of classification When the discontinued operation is disposed as a discontinued Stephen Taylor of or meets the criteria as “held for sale”. [email protected] operation Europe-Africa Write down to fair value less costs to sell. Non-current assets held Depreciation not permitted. for sale Johannesburg Presented separately in the balance sheet. Graeme Berry [email protected] Results and cash flows of Presented separately in the income and cash Copenhagen discontinued operations flow statements. Stig Enevoldsen [email protected] London Veronica Poole The most significant change from IAS 35 relates to the timing of the classification of an [email protected] operation as a discontinued operation. Further, IFRS 5 requires the results of discontinued operations to be presented separately in the income statement. Paris Laurence Rivat IFRS 5 introduces a “held for sale” category for non-current assets and disposal groups.
    [Show full text]
  • Guide to Annual Financial Statements – Illustrative Disclosures 2016
    Illustrative disclosures Guide to annual financial statements IFRS® October 2016 kpmg.com/ifrs Contents About this guide 2 Independent auditors’ report 5 Consolidated financial statements 12 Financial highlights 13 Consolidated statement of financial position 14 Consolidated statement of profit or loss and other comprehensive income 16 Consolidated statement of changes in equity 18 Consolidated statement of cash flows 20 Notes to the consolidated financial statements 22 Appendices I New standards or amendments for 2016 and forthcoming requirements 150 II Presentation of comprehensive income – Two‑statement approach 152 III Statement of cash flows – Direct method 154 IV Example disclosures for entities that early adopt Disclosure Initiative (Amendments to IAS 7) 155 V Example disclosures for entities that early adopt IFRS 9 Financial Instruments (2014) 158 VI Other disclosures not illustrated in the consolidated financial statements 220 Keeping in touch 226 Acknowledgements 228 Notes Basis of preparation 22 Other information 118 1. Reporting entity 22 37. Operating leases 118 2. Basis of accounting 22 38. Commitments 119 3. Functional and presentation currency 22 39. Contingencies 119 4. Use of judgements and estimates 22 40. Related parties 120 41. Subsequent events 123 Performance for the year 24 5. Operating segments 24 Accounting policies 124 6. Discontinued operation 31 42. Basis of measurement 124 7. Revenue 33 43. Correction of errors 125 8. Income and expenses 34 44. Significant accounting policies 126 9. Net finance costs 36 45. Standards issued but not yet effective 142 10. Earnings per share 37 Employee benefits 39 11. Share‑based payment arrangements 39 12. Employee benefits 42 Income taxes 47 13.
    [Show full text]
  • IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations - a Closer Look
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Munich RePEc Personal Archive MPRA Munich Personal RePEc Archive IFRS 5 Non-current assets held for sale and Discontinued operations - a closer look Muthupandian K S The Institute of Cost and Works Accountants of India 20 January 2008 Online at https://mpra.ub.uni-muenchen.de/68853/ MPRA Paper No. 68853, posted 17 January 2016 11:16 UTC 1 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - A Closer Look K.S.Muthupandian* The International Financial Reporting Standard 5 (IFRS 5) was issued as one of the outputs of a short-term project being undertaken by the International Accounting Standards Board (IASB) and the United States Financial Accounting Standards Board (FASB). In September 2002, the project was added to the IASB agenda. On 24 July 2003, the IASB issued the Exposure Draft ED 4 Disposal of Non-current Assets and Presentation of Discontinued Operations. Then on 31 March 2004 the IASB published IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. IFRS 5 arises from the IASB’s consideration of the FASB’s Statement of Financial Accounting Standards No. 144 (SFAS 144) Accounting for the Impairment or Disposal of Long-Lived Assets with the objective of reducing differences between IFRS and US Generally Accepted Accounting Principles (GAAP) that are capable of resolution in a relatively short time. IFRS 5 achieves substantial convergence with the requirements of SFAS 144 with respect to the timing of the classification of operations as discontinued operations and the presentation of such operations.
    [Show full text]
  • IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations By: Brendan Doyle, BA (Hons) in Accounting, MBS Accounting, MA, H
    IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations By: Brendan Doyle, BA (Hons) in Accounting, MBS Accounting, MA, H. Dip. Ed. Examiner in Professional 1 Corporate Reporting This article is designed to clarify and illustrate the requirements of IFRS 5 in so far as they are examinable on the P1 Corporate Reporting paper. It will also be of interest to students of P2 Advanced Corporate Reporting. Introduction: There are two distinct parts to this IFRS. Both are related and can occur together, but each can also occur independently of the other. “Non-current assets held for sale” deals with the situation where an entity decides that a non-current asset (which by definition is held for continuing use in the business) is no longer to be held for continuing use. Rather it is to be sold. As this is an intention rather than an observable fact, strict controls are laid down by IFRS 5 to regulate when an asset is considered to be “held for sale” and also its accounting treatment. “Discontinued operations” arise when an entity decides to discontinue a part of its business. This part of IFRS 5 is concerned with separate disclosure of the results of operations deemed to be discontinued. It is possible to have a discontinued operation which has no assets held for sale. Similarly it is possible to have assets held for sale without discontinuing an operation. They can also occur together. Non-current assets held for sale: Recognition The core principle is that a non-current assets is deemed to be held for sale if its carrying value is expected to be recovered through selling it rather than using it.
    [Show full text]