IFRS

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

2. Overview
 OBJECTIVE
 SCOPE
 CLASSIFICATION OF NON-CURRENT ASSETS (OR DISPOSAL GROUPS) AS HELD FOR
SALE OR AS HELD FOR DISTRIBUTION TO OWNERS
 MEASUREMENT OF NON-CURRENT ASSETS (OR DISPOSAL GROUPS) CLASSIFIED AS
HELD FOR SALE
 Recognition of impairment losses
 PRESENTATION AND DISCLOSURE
 Presenting discontinued operations
 Presentation of a non-current asset or disposal group classified as held for sale
 Additional disclosures

3. OBJECTIVE
.
The objective of this IFRS is to
specify the accounting for assets
held for sale, and the
presentation and disclosure of
discontinued operations.

4. SCOPE
For all IFRS 5 issues except for
(a) deferred tax assets (IAS 12 Income Taxes).
(b) assets arising from employee benefits (IAS 19 Employee Benefits).
(c) financial assets within the scope of IFRS 9 Financial Instruments
(d) non-current assets that are accounted for in accordance with the fair value
model in IAS 40 Investment Property.
(e) non-current assets that are measured at fair value less costs to sell in
accordance with IAS 41 Agriculture.
(f) contractual rights under insurance contracts as defined in IFRS 4 Insurance
Contracts.

5. 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.
•.
•.
•.
•.

6. Continued
. Asset can
only be
classified
as ‘’Held
for sale’’
the asset (or disposal group) must be available for immediate sale in its
present condition.
an active program to locate a buyer and complete the plan must have
been initiated
the sale should be expected to qualify For recognition as a completed
sale within one year from the date of classification
The management must be committed to a plan to sell the asset (or
disposal group),
the asset (or disposal group) must be actively marketed for sale at a
price that is reasonable in relation to its current fair value
it is unlikely that significant changes to the plan will be made or that the
plan will be withdrawn

7. Continued
 If the criteria are met after the reporting period, an entity shall not
classify a non current asset (or disposal group) as held for sale.
 However, when those criteria are met after the reporting period but
before the authorization of the financial statements for issue, the
entity shall disclose the information in the notes

8. MEASURMENT OF NON-CURRENT ASSETS
(OR DISPOSAL GROUPS)
CLASSIFIED AS HELD FOR SALE
• .
• .
• .
• .

9. Continued
.
Non-current asset
held for sale should
not be depreciated,
even if they are still
being used
A non-current asset
(or disposal group)
that is no longer
classified as held for
sale is measured at a
lower of its carrying
amount and
recoverable amount

10. Recognition of impairment losses

11. Reversal of impairment losses

12. PRESENTATION AND DISCLOSURE
Presenting discontinued operations
We shall disclose:
(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

13. Continued
(a) an analysis of the single amount in into:
(b) the net cash flows attributable to the operating, investing and
financing activities of discontinued operations.
(c) the amount of income from continuing operations and from
discontinued operations attributable to owners of the parent
the revenue, expenses and pre-tax profit or loss of discontinued operations;
the related income tax expense
the gain or loss recognized on the measurement to fair value less costs to sell
and
the related income tax expense

14. Continued
Presentation of a non-current asset or disposal group
classified as held for sale
 We 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.

15. Continued
 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.

16. Continued
Additional disclosures
(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;

17. Continued
(c) the gain or loss recognized
(d) if applicable, the reportable segment in which the non-current
asset (or disposal group) is presented in accordance with IFRS 8
Operating Segments.

18. Thank You

19. Questions and
Discussion

20. Case Study 1
 Facts
 ethio telecom is committed to a plan to sell a building and has
started looking for a buyer for that building. ethio telecom will
continue to use the building until another building is completed to
house the office staff located in the building. There is no intention
to relocate the office staff until the new building is completed.

 Required
 Would the building be classified as held for sale?

21. Case Study 2
 Facts
 ethio telecom is planning to sell part of its business that is
deemed to be a disposal group. The entity is in a business
environment that is heavily regulated, and any sale requires
government approval. This means that the sale time is
difficult to determine. Government approval cannot be
obtained until a buyer is found and known for the disposal
group and a firm purchase contract has been signed.
However, it is likely that the entity will be able to sell the
disposal group within one year.
 Required
 Would the disposal group be classified as held for sale?

22. Case Study 3
 Facts
 ethio telecom has an asset that has been designated as held
for sale in the financial year to December 31, 2015. During
the financial year to December 31, 2016, the asset still
remains unsold, but the market conditions for the asset have
deteriorated significantly. The entity believes that market
conditions will improve and has not reduced the price of the
asset, which continues to be classified as held for sale. The
fair value of the asset is 5 million, and the asset is being
marketed at 7 million.
 Required
 Should the asset be classified as held for sale in the financial
statements for the year ending December 31, 2016?

23. Case Study 4
 Facts
 ethio telecom entity is reorganizing its business activities. In
one location, it is stopping the usage of certain equipment
because the demand for the product produced by that
equipment has reduced significantly. The equipment is to be
maintained in good working order, and it is expected that it will
be brought back into use if the demand increases. Additionally,
ethio telecom intends to close three out of five network units.
The network units constitute a major activity of the entity. All the
work within the three units will end during the current year, and
as of the year-end all work will have ceased.
 Required
How will the piece of equipment and the closure of the network
units be treated in the financial statement in the current year