inventories) or not recognise this part of impairment at all (see also IFRIC January 2016 update). If the non-current asset is part of a CGU, its recoverable amount is the carrying amount that would have been recognised after the allocation of any impairment loss arising on that cash-generating unit in accordance with IAS 36 (footnote to IFRS 5.27). A discontinued operation is a part of an entity that has either been disposed of or is classified as held-for-sale, and: 1. represents a separate major line of business or geographical area of operations 2. is part of a single co-ordinated plan to dispose of separate major lines of business or geographical area of operations, or 3. the subsidiary was acquired exclusively with a view to resale. There is no exemption for a subsidiary that had previously been consolidated and that is now being held for sale. Subsidiaries already consolidated now held for sale. Assets classified as held for sale and the assets and liabilities of a disposal group are presented separately from other assets in the statement of financial position, without offsetting. An operation is held for sale if its carrying amount will not be recovered principally by continuing use. Similarly, showing an asset as held for sale can give a… An entity that is committed to a sale involving loss of control of a subsidiary that qualifies for held-for-sale classification under IFRS 5 classifies all of the assets and liabilities of that subsidiary as held for sale, even if the entity will retain a non-controlling interest in its former subsidiary … Excerpts from IFRS Standards come from the Official Journal of the European Union (© European Union, https://eur-lex.europa.eu). Such assets cease to be depreciated as … Once classified as ‘ held for sale’ the asset should be measured at the lower … 2.1 Available for immediate sale A discontinued operation is a component of an entity that has been disposed of, or classified as “held for sale”. Non-current assets/disposal groups classified as held for sale are measured at the lower of: Carrying value of a non-current asset/disposal group is the value determined under other applicable IFRS immediately before the initial classification as held for sale (IFRS 5.18). Subsidiaries held for sale or for distribution to shareholders. its carrying amount before it was classified as held for sale or as held for distribution to owners, adjusted for any. 8A An entity that is 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 set out in paragraphs 6–8 are met, regardless of whether the entity will retain a non-controlling interest in its former subsidiary after the sale. sale'and as a discontinued operation / Due to the fact that the revised lAS 27 lAC 132) now requires all subsidiaries to be consolidated, a subsidiary that is classified as 'held for sale'on the acquisition thereof must also be consolidated. a subsidiary acquired solely for the purpose of resale. Interestingly, IFRS 5 does not require disclosure of non-controlling interest on a subsidiary treated as a disposal group. However, an entity should provide disclosures specified in paragraph IFRS 5.41(a)(b)(d) in the notes (IFRS 5.12). The implications for the consolidated financial statements resulting from the fact that such a subsidiary However, there is a case when the parent has an influence on the subsidiary but does have the majority voting power. That subsidiary may then be the ultimate parent of its own worldwide group, comprising it and its subsidiaries. During the year ending December 31, 2016, the parent company sold $400,000 of inventory to its subsidiary. However, a subsidiary that meets the IFRS 5 criteria as an asset held for sale shall be accounted for under that Standard. In reality, the thrust of the standard is intended to restrict which assets can be classified as held for sale, and which operations can be shown as being discontinued. When a subsidiary is classified as held for sale, all of its assets and liabilities are treated as a disposal group, even if the parent expects to retain a non-controlling interest after the sale (IFRS 5.8A). Unfortunately, the is no requirement in IFRS 10 or IFRS 11 that would be equivalent to paragraph IAS 28.21, but reading IFRS 5.28 in conjunction with IAS 28.21 makes it rather clear what is meant by amending financial statements ‘accordingly’ in IFRS 5.28. The measurement provisions of IFRS 5 do not apply to assets listed in paragraph IFRS 5.5. Note that Subs that are completely disposed or classified as held for sale, are covered by IFRS 5: Non current assets held for sale and discontinued operations. As a rule, costs to sell are measured at their present value if the sale is expected to occur beyond one year. Post them on our Forum, Extension of the period required to complete a sale, Assets or disposal groups acquired exclusively with a view to resale, Impact of events after the end of the reporting period, Non-current assets that are to be abandoned, Fair value remeasurement of a disposal group, Measurement of assets held for distribution to owners, Investments in associates and joint ventures, Exceptions to IFRS 5 measurement provisions, General requirements relating to changes to a plan of sale, Carrying amount before an asset was classified as held for sale, Transfers between held for sale and held for distribution, Disclosure relating to assets held for sale. Secondly, the sale must be highly probable. The equity method is accounting for investment when the parent company holds significant influence over the investee but not fully control. fair value less costs to distribute, where costs to distribute are the incremental costs directly attributable to the distribution, excluding finance costs and income tax expense (IFRS 5.15A). A gain is recognised in the p&l up to the amount of all previous impairment losses. IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations(July 2007) Plan to sell the controlling interest in a subsidiary. A disposal group is a group of assets to be disposed of, by sale or otherwise, together as a group in a single HOWEVER, the company hasn’t actually made this sale yet and so to revalue it now to this amount would be showing a profit that has not yet happened, IFRS 5 says the new value should actually be…, ...The lower of carrying amount (step 1) and FV-CTS (step 2). A full year Subsidiary met Held For Sale requirements From Oct 1. the sale should be expected to be completed within one year from the date of classification. Therefore their values do not have to be shown at their market value necessarily (as your intention is not to sell them), So maybe market value is a better value to use, but they haven’t been sold yet, so showing them at MV might still not be appropriate as this value has not yet been achieved. Is part of a single co-ordinated plan to dispose of a separate major line of businesses or geographical area of operations, or 3. Because the noncontrolling interest owns a portion of the subsidiary (but not of the parent), allocation of intercompany gross profit defer­rals and subsequent recognitions across the non-controlling interest and the parent appear appropriate. When the asset/disposal group ceases to be classified as held for sale is a subsidiary, joint operation, joint venture, associate, or a portion of an interest in a joint venture or an associate, comparative information in financial statements should be adjusted retrospectively. Relevant adjustments to carrying value are recognised in current year P/L and presented in continuing operations (IFRS 5.28) unless the asset/disposal group is a subsidiary, joint operation, joint venture, associate, or a portion of an interest in a joint venture or an associate. A subsidiary classified as 'held for sale', is included in the definition of a discontinued operation, with treatment as follows: Income statement. Presented separately on the face of the balance sheet in current assets. 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