IFRS AT A GLANCE

IFRS 5 Non-current Assets Held for Sale

and Discontinued Operations
 Effective Date
Periods beginning on or after 1 January 2005

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

DEFINITIONS SCOPE

Cash-generating unit – The smallest identifiable group of assets that generates cash inflows that are largely  Applies to all recognised non-current assets and disposal groups of an entity that are:
independent of the cash inflows from other assets or groups of assets. ‒ held for sale; or
‒ held for distribution to owners.
Discontinued operation – A component of an entity that either has been disposed of or is classified as held for sale and  Assets classified as non-current in accordance with IAS 1 Presentation of Financial Statements shall not be reclassified as
either: current assets until they meet the criteria of IFRS 5
 Represents a separate major line of business or geographical area  If an entity disposes of a group of assets, possibly with directly associated liabilities (i.e. an entire cash-generating unit),

 Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations together in a single transaction, if a non-current asset in the group meets the measurement requirements in IFRS 5, then IFRS 5
 Is a subsidiary acquired exclusively with a view to resale. applies to the group as a whole. The entire group is measured at the lower of its carrying amount and fair value less costs to sell
 Non-current assets to be abandoned cannot be classified as held for sale.
Exclusions to measurement requirements of IFRS 5. Disclosure requirements still to be complied with:
CLASSIFICATION OF NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE OR  Deferred tax assets (IAS 12 Income Taxes)
DISTRIBUTION TO OWNERS  Assets arising from employee benefits (IAS 19 Employee Benefits)
 Financial assets in the scope of IAS 39 Financial Instruments: Recognition and Measurement / IFRS 9 Financial Instruments
Classify a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally  Non-current assets that are accounted for in accordance with the fair value model (IAS 40 Investment Property)
through a sale transaction rather than through continuing use. The following criteria must be met:  Non-current assets that are measured at fair value less estimated point of sale costs (IAS 41 Biological Assets)
 Contractual rights under insurance contracts (IFRS 4 Insurance Contracts / IFRS 17 Insurance Contracts).
 The asset (or disposal group) is available for immediate sale
 The terms of asset sale must be usual and customary for sales of such assets
 The sale must be highly probable
MEASUREMENT
 Management is committed to a plan to sell the asset
 Asset must be actively marketed for a sale at a reasonable price in relation to its current fair value
 Immediately prior to classification as held for sale, carrying amount of the asset is measured in accordance with applicable IFRSs
 Sale should be completed within one year from classification date
 After classification, it is measured at the lower of carrying amount and fair value less costs to sell. Assets covered under certain
 Sale transactions include exchanges of non-current assets for other non-current assets when the exchange has
other IFRSs are scoped out of measurement requirements of IFRS 5 – see above
commercial substance in accordance with IAS 16 Property, Plant and Equipment
 Impairment must be considered at the time of classification as held for sale and subsequently
 When an entity acquires a non-current asset exclusively with a view to its subsequent disposal, it shall classify the
 Subsequent increases in fair value cannot be recognised in profit or loss in excess of the cumulative impairment losses that have
non-current asset as held for sale at the acquisition date only if the one year requirement is met
been recognised with this IFRS or with IAS 36 Impairment of Assets
 There are special rules for subsidiaries acquired with a view for resale.
 Non-current assets (or disposal groups) classified as held for sale are not depreciated
Note: The classification criteria also apply to non-current assets (or disposal groups) held for distribution to owners.  Adjustment of number of shares and/or vesting date amount for actual results.
A reclassification from held for sale to held for distribution to owners is not a change to a plan and therefore not a new plan.

DISCLOSURE
DISCONTINUED OPERATIONS
 Non-current assets (or a disposal group) held for sale are disclosed separately from other assets in the statement of financial
 Classification as a discontinued operation depends on when the operation also meets the requirements to be position. If there are any liabilities, these are disclosed separately from other liabilities
classified as held for sale  Description of the nature of assets (or disposal group) held for sale and facts and circumstances surrounding the sale
 Results of discontinued operations are presented as a single amount in the statement of comprehensive income.  A gain or loss resulting from the initial or subsequent fair value measurement of the disposable group or non-current asset held
An analysis of the single amount is presented in the notes or in the statement of comprehensive income for sale if not presented separately in the statement of comprehensive income and the line item that includes that gain or loss
 Cash flow disclosure is required – either in the notes or statement of cash flows  Prior year balances in the statement of financial positions are not reclassified as held for sale
 Comparatives are restated.  If applicable, the reportable segment (IFRS 8) in which the non-current asset or disposable group is presented.
Contact

For further information about how BDO can assist you and your organisation, NORTH AMERICA & CARIBBEAN
please get in touch with one of our key contacts listed below.
Alternatively, please visit www.bdo.global where you can find full lists of regional Armand Capisciolto Canada [email protected]
and country contacts. Wendy Hambleton USA [email protected]

EUROPE LATIN AMERICA

Anne Catherine Farlay France [email protected] Marcello Canetti Argentina [email protected]

Jens Freiberg Germany [email protected] Victor Ramirez Colombia [email protected]
Teresa Morahan Ireland [email protected] Ernesto Bartesaghi Uruguay [email protected]
Ehud Greenberg Israel [email protected]
MIDDLE EAST
Stefano Bianchi Italy [email protected]
Roald Beumer Netherlands [email protected] Arshad Gadit Bahrain [email protected]
Reidar Jensen Norway [email protected] Antoine Gholam Lebanon [email protected]
Leonid Sidelkovskiy Russia [email protected]
David Cabaleiro Spain [email protected] ASIA PACIFIC

René Füglister Switzerland [email protected]

Aletta Boshoff Australia [email protected]
Moses Serfaty United Kingdom [email protected] Hu Jian Fei China [email protected]
Fanny Hsiang Hong Kong [email protected]
Pradeep Suresh India [email protected]
SUB SAHARAN AFRICA
Khoon Yeow Tan Malaysia [email protected]
Theunis Schoeman South Africa [email protected] Ng Kian Hui Singapore [email protected]
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only.
The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the
information contained therein without obtaining specific professional advice. Please contact your respective BDO member firm to
discuss these matters in the context of your particular circumstances. Neither BDO IFR Advisory Limited, Brussels Worldwide
Services BV, BDO International Limited and/or BDO member firms, nor their respective partners, employees and/or agents accept
or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the
information in this publication or for any decision based on it.

Service provision within the international BDO network of independent member firms (‘the BDO network’) in connection with IFRS
(comprising International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the
IFRS Interpretations Committee and the former Standing Interpretations Committee), and other documents, as issued by the
International Accounting Standards Board, is provided by BDO IFR Advisory Limited, a UK registered company limited by guarantee.
Service provision within the BDO network is coordinated by Brussels Worldwide Services BV, a limited liability company incorporated
in Belgium with its statutory seat in Zaventem.

Each of BDO International Limited (the governing entity of the BDO network), Brussels Worldwide Services BV, BDO IFR Advisory
Limited and the member firms is a separate legal entity and has no liability for another such entity’s acts or omissions. Nothing
in the arrangements or rules of the BDO network shall constitute or imply an agency relationship or a partnership between BDO
International Limited, Brussels Worldwide Services BV, BDO IFR Advisory Limited and/or the member firms of the BDO network.

BDO is the brand name for the BDO network and for each of the BDO member firms.

© 2021 BDO IFR Advisory Limited, a UK registered company limited by guarantee. All rights reserved.

www.bdo.global