PFRS 5

NON-CURRENT ASSETS
HELD FOR SALE AND
DISCONTINUED OPERATIONS
Prepared By:
GROUP 5
 WHAT IS OBJECTIVE
Requirement 1

Assets that meet the criteria to be classified as held for

sale to be measured at the LOWER OF CARRYING

OF PFRS 5? AMOUNT AND FAIR VALUE LESS COSTS TO SELL;

depreciation on assets to cease

Requirement 2
OBJECTIVE
Assets that meet the criteria to be classified as held for
sale to be PRESENTED SEPARATELY in the statement
PFRS 5 focuses on two main ideas: of financial position (SFP)

1. To specify the accounting for

assets held for sale Requirement 3
2. To set the presentation and
disclosure requirements for Results of discontinued operations to be PRESENTED
discontinued operations SEPARATELY in statement of comprehensive income
(SCI)
WHAT IS THE SCOPE OF PFRS 5?
SCOPE
Sometimes an entity disposes of a
group of assets, possibly with some
Assets classified as non-current shall directly associated liabilities, together
not be reclassified as current assets in a single transaction. Such a disposal
until they meet the criteria to be group may be a group of;
classified as held for sale. 1. cash-generating units
2. a single cash-generating unit
3. part of a cash-generating unit
The classification and presentation of PFRS 5 will apply to
all recognized non-current assets and disposal groups of
an entity except for the following standards:
Deferred Tax Assets

Assets arising from employee benefits

Financial assets under PFRS 9

Non-current assets with fair value model in PAS 40

Non-current assets measured at fair value less cost sell in PAS 41

Groups of Contracts under PFRS 17

CLASSIFICATION
RELATING TO ASSETS HELD FOR SALE
WHEN DOES AN ENTITY CLASSIFY NON-CURRENT
ASSETS (OR DISPOSAL GROUPS) AS HELD FOR SALE OR
AS HELD FOR DISTRIBUTION TO OWNERS?
PFRS 5 provides that an entity
shall classify a non-currents
assets (or disposal group) as
held for sale if its carrying
amount will be recoverd
principally through a sale
transaction rather than through
continuing use.
 WHEN DOES A SALE OF NON-CURRENT ASSETS (OR DISPOSAL
GROUP) BE HIGHLY PROBABLE?

For the sale to be highly probable, the appropriate level of management must be
committed to a plan to sell the assets (or disposal group), and an Active
program to locate a buyer and complete the plan must have been initiated.

There is an active program to sell when the asset (disposal group) is actively
marketed for sale at a price that is reasonale and in relation to its current fair
value.
DISPOSAL GROUP
A disposal group is a group of assets (and
liabilities directly associated with those
assets) to be disposed of, by sale or
otherwise together as a group in a single
transaction.
IS GOODWILL BE INCLUDED IN A
DISPOSAL GROUP?
Goodwill acquired in a business combination is
included in the disposal group if this group is a cash-
generating unit to which goodwill has been allocated
in accordance with PAS 36 or if it is an operation
within such cash-generating unit.
IN WHAT SITUATIONS The reporting entity has committed itself to sell an asset,
and it expects that other may impose conditions on the A
WILL THERE BE AN transfer of the asset that could not be completed until
after a firm purchase commitment has been made, and a
firm purchase commitment is highly probable within

EXTENSION ON THE one year.

SALE WITHIN ONE A firm purchase commitment is made but a buyer

unexpectedly imposes conditions on the transfer of B
YEAR FROM THE the asset held for sale; timely actions are being taken
to respond to the conditions, and a favorable

DATE OF
resolution is anticipated

CLASSIFICATION? During the one-year period, unforeseen circumstances

arise that were considered unlikely, and the asset is not
sold. Necessary action to respond to the change in
C
circumstances should be taken. The asset should be
actively marketed as held-for-sale should have been met.
MEASUREMENT
RELATING TO ASSETS HELD FOR SALE
HOW DOES AN ENTITY MEASURE A NON-CURRENT ASSETS HELD
FOR SALE?
Before an asset is initially classified as held-for-sale, It is measured in accordance
with the applicable PFRS( PAS 16 is under for PPE)

When non-current assets or disposal group are classified as held-for sale, the
entity shall measure it at the lower of its carrying amount and fair value less
costs to sell.

When the sale is expected to occur beyond one year, the entity shall measure
the costs to sell at their present value. Any increase in the present value of the
costs to sell that arises from the passage of time shall be presented in profit or
loss as a financing cost.
HOW DOES AN ENTITY MEASURE A NON-CURRENT ASSETS HELD
FOR SALE?
Any impairment loss is recognized in profit or loss on any initial or subsequent
write down of the asset or disposal group to fair value less cost to sell.

Any subsequent increases in fair value less cost to sell of an asset can be
recognized in profit or loss to the extent that it is not in excess of the cumulative
impairment loss that has been recognized in accordance with PFRS 5

Any impairment loss recognized for disposal group should be applied in the
order set out in PAS 36.

Non-current assets or disposal groups classified as held-for-sale should not be

depreciated
 PRINCIPLE OF
ASSET’S MEASUREMENT
BEFORE classification as AFTER classification as
held for sale held for sale

Immediately before the initial classification

of the asset as held for sale, the carrying Non-current assets or disposal groups that
amount of the asset will be measured in are classified as held for sale are measured
accordance with applicable PFRS standard. at the lower of carrying amount and fair
Resulting adjustments are also recognized value less costs to sell.
in accordance with applicable PFRS. Thus,
we need to apply normal rules.
CHANGE OF PLANS
WHAT HAPPENS WHEN THERE IS A CHANGE OF PLAN TO
SALE OR TO A PLAN OF DISTRIBUTION TO OWNERS?
If the asset held for sale or held
for distribution to owners is not
later disposed of or distributed,
it is to be reclassified to the
operating asset category it is
properly assigned to.
 THE ENTITY SHALL MEASURE NON-CURRENT ASSET THAT CEASE TO
BE CLASSIFIED AS HELD FOR SALE OR AS HELD FOR DISTRIBUTION TO
OWNERS AT THE LOWER OF:

1. Carrying Amount, before the asset ( or disposal group) was classified as

held for sale or as held for distribution to owners
2. Recoverable Amount, at the date of the subsequent decision not to sell,
or distribute.
(If cash generating unit, its recoverable amount is the carrying amount to be
recognized. )
 ENTITY REMOVES INDIVIDUAL ASSET OR LIABILITY
FROM A DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE
The remaining assets and Otherwise, it shall be Non-current assets that
liabilities of the disposal measured individually do not meet the
group to be sold shall at the lower of their criteria shall cease to
continue to be measured carrying amounts and be classified as held for
as a group only if the fair value less costs to sale.
group meets the criteria sell ( or cost to
for non-current assets distribute) at that date.
held for sale.
DISCONTINUED
OPERATIONS
RELATING TO ASSETS HELD FOR SALE
A DISCONTINUED OPERATION IS A
COMPONENT OF AN ENTITY THAT
EITHER HAS BEEN DISPOSED OF, OR
IS CLASSIFEIED AS HELD FOR SALE
Represents a seperate major line of business or
geographical area of operation

Is the part of a single coordinated plan to dispose of a sparate

major line of business or geographical area of operations

A subsidiary acquired exclusively with a view to resale

DISCLOSURE
RELATING TO DISCONTINUED OPERATIONS
 HOW DOES AN ENTITY PRESENT
DISCONTINUED OPERATION
01 02

The after-tax gain or loss recognized on

The after-tax profit or loss of the measurement to fair value less cost
discontinued operations and; to sell (or on the disposal) of the assets
or disposal groups classified as
discontinued operations.
REQUIRED DISCLOSURES FOR DISCONTINUED OPERATIONS:
Single amount in Statement of
Analysis of Single amount
Comprehensive Income
a.) Post-tax profit or loss of discontinued a.) Revenue, expenses, pre-tax profit or loss, and
operations. related tax.
b.) Gain or loss from fair value measurement or b.) Gain or loss on asset disposal or fair value
disposal of assets. measurement, including tax.

Income from continuing vs. discontinued

operations for owners of the parent.
Cash flows from operating, investing, and Disclose in notes or in the statement of
financing activities related to discontinued comprehensive income.
operations. Separate discontinued operations from
continuing opeartions.
 THANK YOU
FOR YOUR TIME AND ATTENTION TODAY!
- Group 5