8/12/2019 Slfrs5 Non Current Assets Held for Sale and Discontinued Operations
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SLFRS 5 Non CurrentAssets Held for Sale andDiscontinued OperationsSanath Wijesinghej g
Manager - BDO Partners
27th June 2012
2
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SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Outline
introduction
Introduction
ScopeandScopeExclusions
HeldforsaleClassification
HeldforsaleMeasurement
Disposal Groups
3
Groups
Disposalgroups heldforsalemeasurement
DiscontinuedOperations
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
AccountingforAssetsheldforsale
PresentationanddisclosureofDiscontinuedOperations
a. AssetsclassifiedasHFStobemeasuredat thelowerofCAandFVLCS,and
depreciationonsuchassetstocease
b. HFSseparatelyintheSOFPandresultofdiscontinuedoperationsseparately
inSCI
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Scope in
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Allrecognisednoncurrentassets
Alldisposalgroups
5Outline
Scoping of NCA held for distribution to
owners
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
SLFRSpara5A
IFRICInterpretation17
BasisforConclusion 60underIFRIC17
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ScopingofNCAheldfordistributiontoowners Contd.
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
7Outline
Scope Exclusion
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
De erred axassets
Assetsarisingfromemployeebenefits
FinancialassetsunderLKAS39
NCAaccountedundertheFVModelinLKAS40
NCA thataremeasuredatFVLCSLKAS41
Contractualrights
under
SLFRS
4
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Held for sale classification
SLFRS 5- Non Current Assets Held for Sale and Discontinued
Operations
27th June 2012
Basis iftheassets(ordisposalGroups)carryingamountwillberecovered
principallythrough asaletransactionratherthanthroughcontinuinguse Criteria;
Availableforimmediatesale
Highlyprobable
Managementcommittedtoplantosell
Ac veprogrammehas eenin ate
Assetismarketedatareasonablepricecomparedtofairvalue
Saleexpected
to
be
completed
within
1year
from
date
of
classification
(unlessbeyondtheentityscontrol,e.g.regulatoryapprovalrequiredfor
thesalePara.9andAppendixB).
9
DisposalGroup
Outline
Availability for Immediate Sale
SLFRS 5- Non Current Assets Held for Sale and Discontinued
Operations
27th June 2012
Anentityiscommittedtoaplantosellitsheadquartersbuildingandhasinitiated
actionstolocateabuyer.
Scenario(a)Theentityintendstotransferthebuildingtoabuyerafteritvacatesthebuilding.
Thetimenecessarytovacatethebuildingisusualandcustomaryforsalesofsuch
assets.Thecriterionofavailabilityforimmediatesalewouldbemetattheplan commitment dateplan date.
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Availability for Immediate SaleExample
SLFRS 5- Non Current Assets Held for Sale and Discontinued
Operations
27th June 2012
Scenario(b)
Theentitywillcontinuetousethebuildinguntilconstructionofanew
headquartersbuildingiscompleted.Theentitydoesnotintendtotransferthe
existingbuildingtoabuyeruntilafterconstructionofthenewbuildingis
completed(anditvacatestheexistingbuilding).Thedelayinthetimingofthe
transferoftheexistingbuildingimposedbytheentity(seller)demonstratesthat
thebuildingisnotavailableforimmediatesale.Thecriterionavailabilityforimmediatesalewouldnotbemetuntilconstructionofthenewbuildingiscompleted,evenifafirmpurchasecommitmentforthefuturetransferofthe
existing
building
is
obtained
earlier.
11Outline
Exception - Completion of Sales within 1 Year
SLFRS 5- Non Current Assets Held for Sale and Discontinued
Operations
27th June 2012
Anexceptiontotheoneyearrequirementinparagraph8appliesin
limitedsituationsinwhichtheperiodrequiredtocompletethesaleofa
noncurrentasset(ordisposalgroup)willbe(orhasbeen)extendedby
eventsorcircumstancesbeyondanentityscontrolandspecified
conditionsaremet(paragraphs9andB1)
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Exception - Completion of Sales within 1 Year
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Anentityinthepowergeneratingindustryiscommittedtoaplantosella
disposalgroupthatrepresentsasignificantportionofitsregulatedoperations.
Thesalerequiresregulatoryapproval,whichcouldextendtheperiodrequiredto
completethesalebeyondoneyear.Actionsnecessarytoobtainthatapproval
cannotbeinitiateduntilafterabuyerisknownandafirmpurchasecommitment
isobtained.However,afirmpurchasecommitmentishighlyprobablewithinone
year.Inthatsituation,theconditionsinparagraphB1(a)foranexceptiontothe
Example
oneyearrequirementinparagraph8wouldbemet.
13Outline
Held for sale measurement
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
MeasurenoncurrentassetinaccordancewithapplicableSLFRSs/LKSs
Classifyasheldforsaleandmeasureatlowerof:
carryingamount
fairvaluelesscoststosell
Nosubsequentdepreciation
Discloseseparately
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Back
Outline
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Disposal group
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
sposa group
Agroupofassetsandliabilitiestobedisposedoftogetherinasingle
transaction
Heldforsaleclassification
Samecriteriaassingleassetheldforsale
15Outline
Disposal groups held for sale measurement
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
MeasureassetsandliabilitiesinaccordancewithapplicableSLFRSs
Classifyasheldforsaleandmeasureatthelowerof:
carryingamountand
fairvaluelesscoststosell
SLFRS assets allocated SLFRS assets
NosubsequentdepreciationofSLFRS5assets
Discloseassetsandliabilitiesseparatelyassinglelines donotnetoff
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Allocation of an impairment loss on a disposal group
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Theimpairmentlossisallocatedtononcurrentassetstowhichthe
measurementrequirementsoftheSLFRSareapplicable.Thelossis
allocatedtotheassetsintheorderofallocationsetoutinparagraphs
104 and122ofLKAS36
Example
Microsoft Office
Word Document
17Outline
Allocationofanimpairmentlossonadisposalgroup
Distribution of NCA to Owners -IFRIC 17
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Sometimesanentitydistributeassetsotherthancash(noncurrentassets)as
dividendstoitsownersactingintheircapacityasowners.
InterpretationappliestoNonreciprocaldistributionsofassetsbyanentitytoits
owners;
Distributionsofnoncashassets(e.g.PPE,BusinessasdefinedinSLFRS3,
OwnershipinterestinanotherentityordisposalgroupasdefinedinSLFRS5)
and
Distributionsthatgiveownersachoiceofreceivingeithernoncashassetsora
cashalternative.
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Distribution of NCA to Owners -IFRIC 17
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
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IFRIC17appliesonlytodistributionsinwhichallownersofthesameclassof
equityinstrumentsaretreatedequally.
DoesnotapplytoadistributionofNCAthatisultimatelycontrolledbythesame
partyorpartiesbeforeandafterthedistribution.
19Outline
BeforeDistribution
Distribution of NCA to Owners -IFRIC 17After Distribution
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Public
Shareholders
CompanyA
Public
Shareholders
CompanyA SubsidiaryB
SubsidiaryB
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Rational of Scoping NCA held for Distribution
to Owners
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Whenanentityhasanobligationtodistributeassetstoitsowners,the
carryingamountoftheassetswillnolongerberecoveredprincipally
throughcontinuinguse.TheIFRICdecidedthattheinformationrequired
byIFRS5isimportanttousersoffinancialstatementsregardlessofthe
formofatransaction
21Outline
Held for distribution to owners -Classification
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
when the entity is committed to distribute the asset (or disposal
group) to the owners.
Criteria
Available for immediate distribution
Highly probable
Should be expected to be completed within one year from the
date of classification.
(probability of shareholders approval should be considered as
part of the assessment of whether the distribution is highly
probable)
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Held for distribution to owners measurement
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Classifyasheldfordistributiontoownersandmeasureatthelowerof:
carryingamountand
fairvaluelesscoststo distribute
23Outline
NCA to be abandoned
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Anentityshallnoclassifyasheldforsaleanoncurrentasset(ordisposalgroup)
thatistobeabandoned.Thisisbecauseitscarryingamountwillberecovered
principallythroughcontinuinguse. However,ifthedisposalgrouptobeabandonedmeetsrequiredcriteria,theentityshallpresenttheresultsandcash
flowsofthedisposalgroup asdiscontinuedoperationsinaccordancewiththe
guidancegiveninrelevantparagraphsintheStandard.
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NCA to be abandoned
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
InOctober20X9anentitydecidestoabandonallofitscottonmills,which
constituteamajorlineofbusiness.Allworkstopsatthecottonmillsduringthe
yearended31December2010.Inthefinancialstatementsfortheyearended
31December20X9,resultsandcashflowsofthecottonmillsaretreatedas
continuingoperations.Inthefinancialstatementsfortheyearended31
December2010,theresultsandcashflowsofthecottonmillsaretreatedas
discontinuedoperationsandtheentitymakesthedisclosuresrequiredby
Examp e
p y q y
paragraphs33and34oftheSLFRS.
25Outline
Discontinued operations definition
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Componentofanentitythatbythebalancesheetdate:
hasbeendisposedof,OR
meetsheldforsalecriteria
AND
representsaseparatemajorlineofbusinessorgeographicalareaofoperation
isapartofasinglecoordinatedplantodisposeofaseparatemajorlineof
b i ORbus ness
OR
isasubsidiaryacquiredwithaviewtoresell
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Discontinued operations - presentation
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Asingleamountinthestatementofcomprehensiveincomecomprising
posttaxprofit/lossofoperationandprofit/lossonmeasurementtofair
valuelesscoststosell(orondisposal)
Furtheranalysisonfaceorinnotes
27Outline
Presentation and Disclosure
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
IllustrativeExample
Microsoft Office
Word Document
PresentationandDisclosure
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Key points
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
Disposa group can e he or sa e an not be a discon nued opera on
Balance sheet position for assets and disposal groups classified as held for
sale not restated in comparative period
Statement of Comprehensive Income results of discontinued operations
are restated
Abandoned activity at year end may be discontinued but will not be held
for sale
29Outline
SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations
27th June 2012
New DevelopmentsStandard ExistingPara
Reference
Replaced/addedparagraph
SLFRS5 Not
Included
Para5BThis SLFRS specifies the disclosures required in respect of noncurrent
assets (or disposal groups) classified as held for sale or discontinued
operations. Disclosures in other SLFRSs do not apply to such assets (or
disposal groups) unless those SLFRSs require:
(a) specific disclosures in respect of noncurrent assets (or disposal groups)
classified as held for sale or discontinued operations; or
(b) disclosures about measurement of assets and liabilities within a
30
disposal group that are not within the scope of the measurementrequirement of SLFRS 5 and such disclosures are not already provided in
the other notes to the financial statements.
Additional disclosures about noncurrent assets (or disposal groups)
classified as held for sale or discontinued operations may be necessary to
comply with the general requirements of LKAS 1, in particular paragraphs
15 and 125 of that Standard
Outline
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