BM2218

PFRS 15, PFRS 5, AND PFRS 6

PFRS 15 Revenue from Contracts with Customers
Objective
This Standard aims to establish the principles that an entity shall apply to report useful information to users
of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising
from a contract with a customer.

Scope
An entity shall apply this Standard to all contracts with customers except the following:
• Lease contracts within the scope of PFRS 16 Leases;
• Contracts within the scope of PFRS 17 Insurance Contracts. However, an entity may choose to apply
this Standard to insurance contracts that have as their primary purpose the provision of services for a
fixed fee following paragraph 8 of PFRS 17;
• Financial instruments and other contractual rights or obligations within the scope of PFRS 9 Financial
Instruments, PFRS 10 Consolidated Financial Statements; PFRS 11 Joint Arrangements, PAS 27
Separate Financial Statements and PAS 28 Investments in Associates and Joint Ventures; and
• Non-monetary exchanges between entities in the same line of business to facilitate sales to customers
or potential customers. For example, this Standard would not apply to a contract between two (2) oil
companies that agree to an exchange of oil to fulfill demand from their customers in different specified
locations on a timely basis.
A contract with a customer may be partially within the scope of this Standard and partially within the scope
of other Standards listed above.
Suppose the other Standards specify how to separate and/or initially measure one or more parts of the
contract. In that case, an entity shall first apply those Standards' separation and/or measurement
requirements. An entity shall exclude from the transaction price the amount of the part (or parts) of the
contract that is initially measured following other Standards.
Suppose the other Standards do not specify how to separate and/or initially measure one or more parts of the
contract. In that case, the entity shall apply this Standard to separate and/or initially measure the part (or
parts) of the contract.

Definitions
Contract
An agreement between two (2) or more parties that creates enforceable rights and obligations.

Customer
A party contracted with an entity to obtain goods or services that are an output of the entity’s ordinary
activities in exchange for consideration.

Income
Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets
or decreases of liabilities that increase equity, other than those relating to contributions from equity
participants.

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Performance obligation
A promise in a contract with a customer to transfer to the customer either a:
a. Good or service (or a bundle of goods or services) that is distinct; or
b. Series of distinct goods or services that are substantially the same and have the same transfer pattern
to the customer.

Revenue
Income arising in the course of an entity’s ordinary activities.

Transaction price (for a contract with a customer)

The amount of consideration an entity expects to be entitled to in exchange for transferring promised goods
or services to a customer, excluding amounts collected on behalf of third parties.

The five-step model framework

The core principle of PFRS 15 is that an entity will recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. This core principle is delivered in a five-step model framework:

a. Identify the contract(s) with a customer

b. Identify the performance obligations in the contract
c. Determine the transaction price
d. Allocate the transaction price to the performance obligations in the contract
e. Recognize revenue when (or as) the entity satisfies a performance obligation.

Step 1: Identify the contract with the customer

An entity shall account for a contract with a customer within the scope of this Standard only when all of the
following criteria are met:
a. The parties to the contract have approved the contract (in writing, orally or following other customary
business practices) and are committed to performing their respective obligations;
b. The entity can identify each party’s rights regarding the goods or services to be transferred;
c. The entity can identify the payment terms for the goods or services to be transferred;
d. The contract has commercial substance (i.e., the risk, timing or amount of the entity’s future cash
flows is expected to change as a result of the contract); and
e. If entity will probably collect the consideration to which it will be entitled in exchange for the goods
or services transferred to the customer. In evaluating whether the collectability of an amount of
consideration is probable, an entity shall consider only the customer’s ability and intention to pay that
amount of consideration when it is due. The amount of consideration to which the entity will be
entitled may be less than the price stated in the contract if the consideration is variable because the
entity may offer the customer a price concession.

If a contract with a customer does not meet the criteria above, an entity shall continue to assess the contract
to determine whether the criteria are subsequently met.

Step 2: Identify the performance obligations in the contract

At contract inception, an entity shall assess the goods or services promised in a contract with a customer and
shall identify as a performance obligation each promise to transfer to the customer either a:

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a. Good or service (or a bundle of goods or services) that is distinct; or

b. Series of distinct goods or services that are substantially the same and have the same transfer pattern
to the customer.

A series of distinct goods or services have the same pattern of transfer to the customer if both of the following
criteria are met:
a. Each distinct good or service in the series that the entity promises to transfer to the customer would
be a performance obligation satisfied over time; and
b. The same method would measure the entity’s progress towards complete satisfaction of the
performance obligation to transfer each distinct good or service in the series to the customer.

Distinct goods or services

A good or service that is promised to a customer is distinct if both of the following criteria are met:
a. The customer can benefit from the good or service either on its own or together with other resources
that are readily available to the customer (i.e., the good or service is capable of being distinct); and
b. The entity’s promise to transfer the good or service to the customer is separately identifiable from
other promises in the contract (i.e., the promise to transfer the good or service is distinct within the
context of the contract).

In assessing whether an entity’s promises to transfer goods or services to the customer are separately
identifiable, the objective is to determine whether the nature of the promise, within the context of the
contract, is to transfer each of those goods or services individually or, instead, to transfer a combined item or
items to which the promised goods or services are inputs. Factors that indicate that two (2) or more promises
to transfer goods or services to a customer are not separately identifiable include, but are not limited to, the
following:
a. The entity provides a significant service of integrating the goods or services with other goods or
services promised in the contract into a bundle representing the combined output or outputs the
customer has contracted. In other words, the entity uses the goods or services as inputs to produce
or deliver the combined output or outputs specified by the customer. A combined output or outputs
might include more than one phase, element or unit.
b. One or more of the goods or services significantly modifies or customizes, or are significantly modified
or customized by, one or more of the other goods or services promised in the contract.
c. The goods or services are highly interdependent or highly interrelated. In other words, each of the
goods or services is significantly affected by one or more of the other goods or services in the contract.
For example, in some cases, two (2) or more goods or services are significantly affected by each other
because the entity could not fulfill its promise by transferring each of the goods or services
independently.

Step 3: Determine the transaction price

An entity shall consider the terms of the contract and its customary business practices to determine the
transaction price. The transaction price is the amount of consideration an entity expects to be entitled to in
exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of
third parties (for example, some sales taxes). The consideration promised in a contract with a customer may
include fixed amounts, variable amounts, or both.

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Variable consideration
Suppose the consideration promised in a contract includes a variable amount. In that case, an entity shall
estimate the amount of consideration to which the entity will be entitled in exchange for transferring the
promised goods or services to a customer.

An amount of consideration can vary because of discounts, rebates, refunds, credits, price concessions,
incentives, performance bonuses, penalties or other similar items. The promised consideration can also vary
if an entity’s entitlement to the consideration is contingent on the occurrence or non-occurrence of a future
event. For example, an amount of consideration would be variable if either a product was sold with a right of
return or a fixed amount is promised as a performance bonus on achievement of a specified milestone.

Constraining estimates of variable consideration

An entity shall include in the transaction price some or all of an amount of variable consideration estimated
only to the extent that, probably, a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Sales-based or usage-based royalties

An entity shall recognize revenue for a sales-based or usage-based royalty promised in exchange for a license
of intellectual property only when (or as) the following events occur:
a. The subsequent sale or usage occurs; and
b. The performance obligation to which some or all of the sales-based or usage-based royalty has been
allocated has been satisfied (or partially satisfied).

Step 4: Allocate the transaction price to the performance obligations in the contracts
To meet the allocation objective, an entity shall allocate the transaction price to each performance obligation
identified in the contract on a relative stand-alone selling price basis. Suppose a stand-alone selling price is
not directly observable. In that case, an entity shall estimate the stand-alone selling price at an amount that
would result in the allocation of the transaction price.

Suitable methods for estimating the stand-alone selling price of a good or service include, but are not limited
to, the following:
a. Adjusted market assessment approach—An entity could evaluate the market in which it sells goods
or services and estimate the price that a customer in that market would be willing to pay for those
goods or services. That approach might also include referring to prices from the entity’s competitors
for similar goods or services and adjusting those prices to reflect the entity’s costs and margins.
b. Expected cost plus a margin approach—An entity could forecast its expected costs of satisfying a
performance obligation and then add an appropriate margin for that good or service.
c. Residual approach—An entity may estimate the stand-alone selling price by reference to the total
transaction price less the sum of the observable stand-alone selling prices of other goods or services
promised in the contract. However, an entity may use a residual approach to estimate the stand-alone
selling price of a good or service only if one of the following criteria is met:
I. The entity sells the same good or service to different customers (at or near the same time) for a
broad range of amounts (i.e., the selling price is highly variable because a representative stand-
alone selling price is not discernible from past transactions or other observable evidence); or

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II. The entity has not yet established a price for that good or service, and the good or service has not
previously been sold on a stand-alone basis (i.e., the selling price is uncertain).

Allocation of a discount
A customer receives a discount for purchasing a bundle of goods or services if the sum of the stand-alone
selling prices of those promised goods or services in the contract exceeds the promised consideration in a
contract. Except when an entity has observable evidence that the entire discount relates to only one or more,
but not all, performance obligations in a contract, the entity shall allocate a discount proportionately to all
performance obligations in the contract. The proportionate allocation of the discount in those circumstances
is a consequence of the entity allocating the transaction price to each performance obligation based on the
relative stand-alone selling prices of the underlying distinct goods or services.

The existence of a significant financing component in the contract

In determining the transaction price, an entity shall adjust the promised amount of consideration for the
effects of the time value of money if the timing of payments agreed to by the parties to the contract (either
explicitly or implicitly) provides the customer or the entity with a significant benefit of financing the transfer
of goods or services to the customer. In those circumstances, the contract contains a significant financing
component. A significant financing component may exist regardless of whether the promise of financing is
explicitly stated in the contract or implied by the payment terms agreed to by the parties to the contract.

As a practical expedient, an entity need not adjust the promised amount of consideration for the effects of a
significant financing component if the entity expects, at contract inception, that the period between when the
entity transfers a promised good or service to a customer and when the customer pays for that good or service
will be one year or less.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
For each performance obligation identified, an entity shall determine at contract inception whether it satisfies
the performance obligation over time or satisfies the performance obligation at a point in time. If an entity
does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time.

An entity shall recognize revenue when (or as) the entity satisfies a performance obligation by transferring a
promised good or service (i.e., an asset) to a customer. An asset is transferred when (or as) the customer
obtains control of that asset.

Goods and services are assets, even if only momentarily when they are received and used (as in the case of
many services). Control of an asset refers to the ability to direct the use of and substantially obtain all of the
remaining benefits from the asset. Control includes preventing other entities from directing the use of and
obtaining the benefits from an asset. The benefits of an asset are the potential cash flows (inflows or savings
in outflows) that can be obtained directly or indirectly in many ways, such as by:
a. Using the asset to produce goods or provide services (including public services);
b. Using the asset to enhance the value of other assets;
c. Using the asset to settle liabilities or reduce expenses;
d. Selling or exchanging the asset;
e. Pledging the asset to secure a loan; and
f. Holding the asset.

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Performance obligations satisfied over time

An entity transfers control of a good or service over time and, therefore, satisfies a performance obligation
and recognizes revenue over time if one of the following criteria is met:
a. The customer simultaneously receives and consumes the benefits provided by the entity’s
performance as the entity performs;
b. The entity’s performance creates or enhances an asset (for example, work in progress) that the
customer controls as the asset is created or enhanced; or
c. The entity’s performance does not create an asset with an alternative use to the entity, and the entity
has an enforceable right to payment for performance completed to date.

Performance obligations satisfied at a point in time

If a performance obligation is not satisfied over time, an entity satisfies the performance obligation at a point
in time. To determine when a customer obtains control of a promised asset and the entity satisfies a
performance obligation, the entity shall consider the requirements for control. In addition, an entity shall
consider indicators of the transfer of control, which include, but are not limited to, the following:
a. The entity has a present right to payment for the asset. Suppose a customer is presently obliged to pay
for an asset. That, may indicate that the customer can directly use and obtain the remaining benefits
from the asset in exchange.
b. The customer has legal title to the asset. The legal title may indicate which party to a contract can
direct the use of and obtain all of the remaining benefits from an asset substantially or restrict the
access of other entities to those benefits. Therefore, the transfer of the legal title of an asset may
indicate that the customer has obtained control of the asset. Suppose an entity retains legal title as
protection against the customer’s failure to pay. In that case, those rights of the entity will not
preclude the customer from obtaining control of an asset.
c. The entity has transferred physical possession of the asset. The customer’s physical possession of an
asset may indicate that the customer can directly use and obtain substantially all of the remaining
benefits from the asset or restrict the access of other entities to those benefits. However, physical
possession may not coincide with control of an asset. For example, in some repurchase agreements
and consignment arrangements, a customer or consignee may have physical possession of an asset
the entity controls. Conversely, in some bill-and-hold arrangements, the entity may have physical
possession of an asset that the customer controls.
d. The customer has the significant risks and rewards of ownership of the asset. The transfer of the
significant risks and rewards of ownership of an asset to the customer may indicate that the customer
has obtained the ability to direct the use of and obtain all of the remaining benefits from the asset
substantially. However, when evaluating the risks and rewards of ownership of a promised asset, an
entity shall exclude any risks that give rise to a separate performance obligation in addition to the
performance obligation to transfer the asset. For example, an entity may have transferred control of
an asset to a customer but not yet satisfied an additional performance obligation to provide
maintenance services related to the transferred asset.
e. The customer has accepted the asset. The customer’s acceptance of an asset may indicate that it has
obtained the ability to directly use and substantially obtain all of the remaining benefits from the asset.

Contract costs

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An entity shall recognize as an asset the incremental costs of obtaining a contract with a customer if the entity
expects to recover those costs.

The incremental costs of obtaining a contract are those that an entity incurs to obtain a contract with a
customer that it would not have incurred if it had not been obtained (for example, a sales commission).

Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained
shall be recognized as an expense unless those costs are explicitly chargeable to the customer regardless of
whether the contract is obtained.

As a practical expedient, an entity may recognize the incremental costs of obtaining a contract as an expense
when incurred if the amortization period of the asset that the entity otherwise would have recognized is one
(1) year or less.

Costs to fulfill a contract

Suppose the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard
(for example, PAS 2 Inventories, PAS 16 Property, Plant and Equipment or PAS 38 Intangible Assets). In that
case, an entity shall recognize an asset from the costs incurred to fulfill a contract only if those costs meet all
of the following criteria:
a. The costs relate directly to a contract or to an anticipated contract that the entity can specifically
identify (for example, costs relating to services to be provided under renewal of an existing contract
or costs of designing an asset to be transferred under a specific contract that has not yet been
approved);
b. The costs generate or enhance resources of the entity that will be used in satisfying (or in continuing
to satisfy) performance obligations in the future; and
c. The costs are expected to be recovered.

Costs that relate directly to a contract (or a specific anticipated contract) include any of the following:
a. Direct labor (for example, salaries and wages of employees who provide the promised services directly
to the customer);
b. Direct materials (for example, supplies used in providing the promised services to a customer);
c. allocations of costs that relate directly to the contract or to contract activities (for example, costs of
contract management and supervision, insurance and depreciation of tools, equipment and
right‑of‑use assets used in fulfilling the contract);
d. Costs that are explicitly chargeable to the customer under the contract; and
e. Other costs are incurred only because an entity entered into the contract (for example, payments to
subcontractors).

Amortization and impairment

An asset recognized shall be amortized systematically, consistent with the transfer to the customer of the
goods or services to which the asset relates. The asset may relate to goods or services to be transferred under
a specific anticipated contract.

Presentation
When either party to a contract has performed, an entity shall present the contract in the statement of
financial position as a contract asset or a contract liability, depending on the relationship between the entity’s

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performance and the customer’s payment. An entity shall present any unconditional rights to consideration
separately as a receivable.

Suppose a customer pays consideration, or an entity has a right to an amount of consideration that is
unconditional (i.e., a receivable) before the entity transfers a good or service to the customer. In that case,
the entity shall present the contract as a contract liability when the payment is made or due (whichever is
earlier). A contract liability is an entity’s obligation to transfer goods or services to a customer for which the
entity has received consideration (or an amount of consideration is due).

Suppose an entity performs by transferring goods or services to a customer before the customer pays
consideration or before payment is due. In that case, the entity shall present the contract as a contract asset,
excluding any amounts presented as receivable. A contract asset is an entity’s right to consideration in
exchange for goods or services that the entity has transferred to a customer. An entity shall assess a contract
asset for impairment following PFRS 9. An impairment of a contract asset shall be measured, presented and
disclosed on the same basis as a financial asset within the scope of PFRS 9.

A receivable is an entity’s right to consideration that is unconditional. A right to consideration is unconditional

if only time is required before payment of that consideration is due. For example, an entity would recognize a
receivable if it has a present right to payment even though that amount may be subject to refund in the future.
An entity shall account for a receivable following PFRS 9. Upon initial recognition of a receivable from a
contract with a customer, any difference between the measurement of the receivable following PFRS 9 and
the corresponding amount of revenue recognized shall be presented as an expense (for example, as an
impairment loss).

Disclosure
The objective of the disclosure requirements is for an entity to disclose sufficient information to enable users
of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows
arising from contracts with customers. To achieve that objective, an entity shall disclose qualitative and
quantitative information about all of the following:
a. Its contracts with customers;
b. The significant judgments, and changes in the judgments, made in applying this Standard to those
contracts; and
c. Any assets recognized from the costs to obtain or fulfill a contract with a customer.

An entity shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis
to place on each of the various requirements. An entity shall aggregate or disaggregate disclosures so that
valuable information is not obscured by either the inclusion of a large amount of insignificant detail or the
aggregation of items with substantially different characteristics.

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

Scope
The classification and presentation requirements of this PFRS apply to all recognized non‑current assets and
all an entity's disposal groups. The measurement requirements of this PFRS apply to all recognized non‑current
assets and disposal groups, except for those assets listed below, which shall continue to be measured following
the Standard noted.

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Assets classified as non‑current following PAS 1 Presentation of Financial Statements shall not be reclassified
as current assets until they meet the criteria to be classified as held for sale following this PFRS. Assets of a
class that an entity would generally regard as non‑current acquired exclusively with a view to resale shall not
be classified as current unless they meet the criteria to be classified as held for sale following this PFRS.

The measurement provisions of this PFRS do not apply to the following assets, which are covered by the PFRSs
listed, either as individual assets or as part of a disposal group:
a. Deferred tax assets (PAS 12 Income Taxes).
b. Assets arising from employee benefits (PAS 19 Employee Benefits).
c. Financial assets within the scope of PFRS 9.
d. non‑current assets that are accounted for following the fair value model in PAS 40 Investment
Property.
e. Non-current assets that are measured at fair value less costs to sell following PAS 41 Agriculture.
f. Groups of contracts within the scope of PFRS 17.

Key provisions relating to assets held for sale

Classification of non‑current assets (or disposal groups) as held for sale or as held for distribution to owners
An entity shall classify a non‑current asset (or disposal group) as held for sale if its carrying amount will be
recovered principally through a sale transaction rather than through continuing use.

For this to be the case, the asset (or disposal group) must be available for immediate sale in its present
condition, subject only to usual and customary terms for selling such assets (or disposal groups). Its sale must
be highly probable.

For the sale to be highly probable, the appropriate management level must be committed to a plan to sell the
asset (or disposal group). An active program to locate a buyer and complete the plan must have been initiated.
Further, the asset (or disposal group) must be actively marketed for sale at a reasonable price concerning its
current fair value. In addition, the sale should be expected to qualify for recognition as a completed sale within
one year from the classification date. Actions required to complete the plan should indicate that it is unlikely
that significant changes will be made or that the plan will be withdrawn. The probability of shareholders’
approval (if required in the jurisdiction) should be considered to assess whether the sale is highly probable.

An entity shall not classify as held for sale a non‑current asset (or disposal group) to be abandoned. It is
because its carrying amount will be recovered principally through continuing use.

An entity committed to a sale plan involving loss of control of a subsidiary shall classify all the assets and
liabilities of that subsidiary as held for sale when the criteria above are met, regardless of whether the entity
will retain a non‑controlling interest in its former subsidiary after the sale.

Held for distribution to owners' classification

The classification, presentation and measurement requirements in this PFRS applicable to a non‑current asset
(or disposal group) that is classified as held for sale also apply to a non‑current asset (or disposal group) that
is classified as held for distribution to owners acting in their capacity as owners (held for distribution to
owners).

A non‑current asset (or disposal group) is classified as held for distribution to owners when the entity is
committed to distributing the asset (or disposal group) to the owners. For this to be the case, the assets must

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be available for immediate distribution in their present condition, and the distribution must be highly
probable. For the distribution to be highly probable, actions to complete the distribution must have been
initiated. They should be expected to be completed within one (1) year from the classification date. Actions
required to complete the distribution should indicate that it is unlikely that significant changes will be made
or that the distribution will be withdrawn. The probability of shareholders’ approval (if required in the
jurisdiction) should be considered to assess whether the distribution is highly probable.

Disposal group concept

Sometimes an entity disposes of a group of assets, possibly with some directly associated liabilities, together
in a single transaction. Such a disposal group may be a group of cash‑generating units, a single cash‑generating
unit, or part of a cash‑generating unit. If a non‑current asset within the scope of the measurement
requirements of this PFRS is part of a disposal group, the measurement requirements of this PFRS apply to the
group as a whole so that the group is measured at the lower of its carrying amount and fair value less costs to
sell.

Measurement of a non‑current asset (or disposal group)

At the time of classification, as held for sale
Immediately before the initial classification of the asset (or disposal group) as held for sale, the carrying
amounts of the asset (or all the assets and liabilities in the group) shall be measured following applicable
PFRSs.

After classification as 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.

An entity shall measure a non‑current asset (or disposal group) classified as held for distribution to owners at
the lower carrying amount and fair value less costs to distribute.

Impairment
An entity shall recognize an impairment loss for any initial or subsequent write‑down of the asset (or disposal
group) to fair value less selling costs.

Assets carried at fair value before the initial classification

For such assets, the requirement to deduct costs to sell from fair value may result in an immediate charge to
profit or loss.

Subsequent increases in fair value

An entity shall recognize a gain for any subsequent increase in fair value less costs to sell an asset, but not in
excess of the cumulative impairment loss that has been recognized either following this PFRS or previously
per PAS 36 Impairment of Assets.

An entity shall recognize a gain for any subsequent increase in fair value less costs to sell a disposal group:
a. To the extent that it has not been recognized; but
b. Not in excess of the cumulative impairment loss that has been recognized, either following this PFRS
or previously under PAS 36, on the non‑current assets that are within the scope of the measurement
requirements of this PFRS.

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No depreciation
An entity shall not depreciate (or amortize) a non‑current asset while it is classified as held for sale or 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 recognized.

Presentation and disclosure

An entity shall present a non‑current asset classified as held for sale and the assets of a disposal group
classified as held for sale separately from other assets in the statement of financial position. The liabilities of
a disposal group classified as held for sale shall be presented separately from other liabilities in the statement
of financial position. Those assets and liabilities shall not be offset and presented as a single amount. The
major classes of assets and liabilities classified as held for sale shall be separately disclosed either in the
statement of financial position or in the notes. If the disposal group is a newly acquired subsidiary that meets
the criteria to be classified as held for sale on the acquisition, disclosure of the major classes of assets and
liabilities is not required. An entity shall present separately any cumulative income or expense recognized in
other comprehensive income relating to a non‑current asset (or disposal group) classified as held for sale.

An entity shall disclose the following information in the notes in the period in which a non‑current asset (or
disposal group) has been either classified as held for sale or sold:
a. A description of the non‑current asset (or disposal group);
b. A description of the facts and circumstances of the sale, or leading to the expected disposal, and the
expected manner and timing of that disposal;
c. The gain or loss recognized and, if not separately presented in the statement of comprehensive
income, the caption in the statement of comprehensive income that includes that gain or loss;
d. If applicable, the reportable segment in which the non‑current asset (or disposal group) is presented
follows PFRS 8 Operating Segments.

This PFRS specifies the disclosures required regarding non‑current assets (or disposal groups) classified as held
for sale or discontinued operations. Disclosures in other PFRSs do not apply to such assets (or disposal groups)
unless those PFRSs require:
a. Specific disclosures in respect of non‑current assets (or disposal groups) classified as held for sale or
discontinued operations; or
b. Disclosures about the measurement of assets and liabilities within a disposal group that is not within
the scope of the measurement requirement of PFRS 5 and such disclosures are not already provided
in the other notes to the financial statements.

Additional disclosures about non‑current assets (or disposal groups) classified as held for sale or discontinued
operations may be necessary to comply with the general requirements of PAS 1.

Key provisions relating to discontinued operations

Classification as discontinuing
A discontinued operation is a component of an entity that either has been disposed of or is classified as held
for sale, and
a. Represents a separate major line of business or geographical area of operations,
b. Is part of a single coordinated plan to dispose of a separate major line of business or geographical area
of operations or
c. It is a subsidiary acquired exclusively with a view to resale.

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An entity shall not classify a non‑current asset (or disposal group) as held for sale in those financial statements
when issued.

Disclosures
An entity shall disclose the following:
a. A single amount in the statement of comprehensive income comprising the total of:
i. The post‑tax profit or loss of discontinued operations and
ii. The post‑tax gain or loss recognized on the measurement to fair value less costs to sell or on the
disposal of the assets or disposal group(s) constituting the discontinued operation.
b. An analysis of the single amount in (a) into:
i. The revenue, expenses and pre‑tax profit or loss of discontinued operations;
ii. The related income tax expense is required by paragraph 81(h) of PAS 12.
iii. The gain or loss recognized on the measurement to fair value less costs to sell or on the disposal
of the assets or disposal group(s) constituting the discontinued operation; and
iv. The related income tax expense is required by paragraph 81(h) of PAS 12.
The analysis may be presented in the notes or the statement of comprehensive income. If it is
presented in the statement of comprehensive income, it shall be presented in a section that relates
to discontinued operations, i.e., separately from continuing operations. The analysis is not required
for disposal groups of newly acquired subsidiaries that meet the criteria to be classified as held for
sale on acquisition.
c. The net cash flows are attributable to discontinued operations' operating, investing and financing
activities. These disclosures may be presented in the notes or financial statements. These disclosures
are not required for disposal groups of newly acquired subsidiaries that meet the criteria to be
classified as held for sale on acquisition.
d. The income from continuing and discontinued operations is attributable to the parent's owners. These
disclosures may be presented in the notes or the statement of comprehensive income.
Suppose an entity presents the profit or loss items in a separate statement described in paragraph 10A of PAS
1. In that case, a section relating to discontinued operations is presented in that statement. An entity shall
represent the disclosures for prior periods presented in the financial statements so that the disclosures relate
to all operations discontinued by the end of the reporting period for the latest period presented.

Adjustments in the current period to amounts previously presented in discontinued operations directly related
to the disposal of a discontinued operation in a prior period shall be classified separately in discontinued
operations. The nature and amount of such adjustments shall be disclosed. Examples of circumstances in
which these adjustments may arise include the following:
a. The resolution of uncertainties that arise from the terms of the disposal transaction, such as the
resolution of purchase price adjustments and indemnification issues with the purchaser.
b. The resolution of uncertainties that arise from and are directly related to the operations of the
component before its disposal, such as environmental and product warranty obligations retained by
the seller.
c. The settlement of employee benefit plan obligations provided that the settlement is directly related
to the disposal transaction.

Suppose an entity ceases to classify a component of an entity as held for sale. In that case, the results of
operations of the component previously presented in discontinued operations shall be reclassified and

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included in income from continuing operations for all periods presented. The amounts for prior periods shall
be described as having been represented.

PFRS 6 Exploration for and Evaluation of Mineral Resources

Scope
An entity shall apply the PFRS to its exploration and evaluation expenditures.

The PFRS does not address other aspects of accounting by entities engaged in exploring and evaluating mineral
resources.

An entity shall not apply the PFRS to expenditures incurred:

a. Before the exploration for and evaluation of mineral resources, such as expenditures incurred before
the entity has obtained the legal rights to explore a specific area.
b. After extracting a mineral resource's technical feasibility and commercial viability are demonstrable.

Definitions
Exploration for and evaluation of mineral resources
The search for mineral resources, including minerals, oil, natural gas and similar non‑regenerative resources
after the entity has obtained legal rights to explore in a specific area, as well as the determination of the
technical feasibility and commercial viability of extracting the mineral resource.

Exploration and evaluation assets

The entity’s accounting policy recognizes exploration and evaluation expenditures as assets.

Exploration and evaluation expenditures

Expenditures incurred by an entity concerning the exploration for and evaluation of mineral resources before
the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.

Temporary exemption from PAS 8 paragraphs 11 and 12

When developing its accounting policies, an entity recognizing exploration and evaluation assets shall apply
paragraph 10 of PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Paragraphs 11 and 12 of PAS 8 specify sources of authoritative requirements and guidance management must
consider when developing an accounting policy for an item if no PFRS applies.

Measurement of exploration and evaluation assets

Exploration and evaluation assets shall be measured at cost.

An entity shall determine an accounting policy specifying which expenditures are recognized as exploration
and evaluation assets and apply the policy consistently. In making this determination, an entity considers the
degree to which the expenditure can be associated with finding specific mineral resources. The following are
examples of expenditures that might be included in the initial measurement of exploration and evaluation
assets (the list is not exhaustive):
a. Acquisition of rights to explore;
b. Topographical, geological, geochemical and geophysical studies;
c. Exploratory drilling;

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d. Trenching;
e. Sampling; and
f. Activities evaluating the technical feasibility and commercial viability of extracting a mineral resource.

Expenditures related to the development of mineral resources shall not be recognized as exploration and
evaluation assets. The Conceptual Framework for Financial Reporting and PAS 38 guide recognizing assets
arising from development.

After recognition, an entity shall apply the cost or revaluation models to the exploration and evaluation assets.
If the revaluation model is applied (either the model in PAS 16 or the model in PAS 38), it shall be consistent
with the classification of the assets

Changes in accounting policies

An entity may change its accounting policies for exploration and evaluation expenditures if the change makes
the financial statements more relevant to the economic decision‑making needs of users and no less reliable
or more reliable and relevant to those needs. An entity shall judge relevance and reliability using the criteria
in PAS 8

Impairment
Exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that
the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts
and circumstances suggest that the carrying amount exceeds the recoverable amount, an entity shall measure,
present and disclose any resulting impairment loss per PAS 36.

An entity shall determine an accounting policy for allocating exploration and evaluation assets to
cash‑generating units or groups of cash‑generating units to assess such assets for impairment. Each
cash‑generating unit or group of units to which an exploration and evaluation asset is allocated shall not be
larger than an operating segment determined following PFRS 8.

Disclosure
An entity shall disclose information identifying and explaining the amounts recognized in its financial
statements from exploring and evaluating mineral resources.

An entity shall disclose the following:

a. Its accounting policies for exploration and evaluation expenditures, including recognizing exploration
and evaluation assets.
b. The amounts of assets, liabilities, income and expense and operating and investing cash flows arising
from the exploration for and evaluation of mineral resources.

An entity shall treat exploration and evaluation assets as a separate class of assets and make the disclosures
required by either PAS 16 or PAS 38 consistent with how the assets are classified.

References:
Millan, Z. (2022). Conceptual Framework & Accounting Standards. Bandolin Enterprise.

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Valix, C., Peralta, J., & Valix, C. (2022). Conceptual Framework and Accounting Standards. GIC Enterprises &
Co., Inc.
Cabrera, M., Cabrera, G., & Cabrera, B. (2022). Conceptual Framework and Accounting Standards. GIC
Enterprises & Co., Inc.
IFRS Foundation. (2022). PFRS 15 Revenue from Contracts with Customers. Retrieved on October 18, 2022,
from https://www.ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-from-contracts-with-
customers.html/content/dam/ifrs/publications/html-standards/english/2022/issued/ifrs15/
IFRS Foundation. (2022). PFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Retrieved on
October 18, 2022, from https://www.ifrs.org/issued-standards/list-of-standards/ifrs-5-non-current-
assets-held-for-sale-and-discontinued-operations.html/content/dam/ifrs/publications/html-
standards/english/2022/issued/ifrs5/
IFRS Foundation. (2022). PFRS 6 Exploration for and Evaluation of Mineral Resources. Retrieved on October
18, 2022, from https://www.ifrs.org/issued-standards/list-of-standards/ifrs-6-exploration-for-and-
evaluation-of-mineral-resources.html/content/dam/ifrs/publications/html-
standards/english/2022/issued/ifrs6/
IAS Plus. (2022). PFRS 15 Revenue from Contracts with Customers. Retrieved on October 18, 2022, from
https://www.iasplus.com/en/standards/ifrs/ifrs15
IAS Plus. (2022). PFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Retrieved on October
18, 2022, from https://www.iasplus.com/en/standards/ifrs/ifrs5
IAS Plus. (2022). PFRS 6 Exploration for and Evaluation of Mineral Resources. Retrieved on October 18, 2022,
from https://www.iasplus.com/en/standards/ifrs/ifrs6

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