This document summarizes IAS 18 on revenue recognition and IFRS 5 on non-current assets held for sale. IAS 18 establishes guidelines for recognizing revenue from sales of goods, services rendered, and interest, royalties and dividends. It defines revenue and outlines exceptions. IFRS 5 provides criteria for classifying non-current assets as held for sale and guidelines for measurement, disclosure, and presentation of discontinued operations. A non-current asset is classified as held for sale if its carrying amount will be recovered through a sale transaction that is highly probable within one year.

1. IAS 18-REVENUE and IFRS 5
Presented by Mark Nelson
Chimndozi

2. OBJECTIVE
To prescribe the accounting treatment of
revenue arising from specific types of
transactions or events.

3. SCOPE
This Standard shall be applied in
accounting for revenue arising from the
following transactions and events:
• The sale of goods;
• The rendering of services; and
• The use by others of entity assets
yielding interest, royalties and dividends.

4. DEFINITION
• Revenue is the gross inflow of economic
benefits during the period arising in the
course of the ordinary activities of an
entity when those inflows result in
increases in equity, other than increases
relating to contributions from equity
participants.

5. REVENUE EXCEPTIONS
• Revenue does not include sales taxes,
value added taxes or goods and service
taxes which are only collected for third
parties, because these do not represent
an economic benefit flowing to the
entity.
• The same applies with revenue received
by an agent on behalf of the principal
which represent a commission

6. MEASUREMENT
• The revenue is measured as the fair
value of the consideration received.
• If the revenue is receivable more than
12 months after it has been earned it
will usually be discounted to present
value.

7. RECOGNITION
Revenue from the sale of goods should
Only be recognized only if:
• The entity has transferred the significant
risks and rewards of ownership of the
goods to the buyer.
• The amount of revenue can be measured
reliably.

8. RECOGNITION
CONT…..
• The entity has no continuing managerial
involvement to the degree usually
associated with ownership, and no longer
has effective control over the goods sold.
• It is probable that the economic benefits
associated with the transaction will flow
to the entity.

9. RECOGNITION
CONT…..
• The costs incurred in respect of the
transaction can be measured reliably.
• It is probable that the economic benefits
associated with the transaction will flow
to the entity.
• The costs incurred in respect of the
transaction can be measured reliably.

10. DISLOSURE
• The amount of each significant category
of revenue recognized during the period.
• The accounting policies adopted for the
recognition of revenue and the methods
used
• The amount of revenue arising from
exchanges of goods or services included
in each significant category of revenue.

11. THIS SLIDE WAS
INTENTIONALLY LEFT BLANK

12. INTERNATIONAL FINANCIAL
REPORTING STANDARD 5
NON-CURRENT ASSETS HELD FOR SALE AND
DISCONTINUED OPERATIONS

13. OBJECTIVE
• To prescribe the accounting treatment
for Non-Current Assets held for sale and
the presentation and disclosure of
discontinued operations.

14. SCOPE
It applies to the accounting for all Non-
Current Assets held for sale and
discontinued operations.
IFRS 5 does not apply to:
• Deferred tax assets (IAS 12)
• Assets arising from employee benefits
(IAS 19)
• Financial assets (IFRS 9)

15. SCOPE
CONT…
• Investment properties accounted for in
accordance with the fair value model (IAS
40)
• Agricultural and biological assets (IAS 41)
• Insurance contracts (IFRS 4)

16. CLASSIFICATION
A non-current asset or disposal group
should be classified as held for sale if its
carrying amount will be recovered
principally through a sale transaction
rather than through continuing use. The
following should be met:
• The asset must be available for
immediate sale in its present condition.
• Its sale must be highly probable.

17. HIGHLY PROBABLE SALE
For the sale to be highly probable, the following must
apply:
• Management must be committed to a plan to sell the
asset.
• There must be an active programme to locate a buyer.
• The asset must be marketed for sale at a price that is
reasonable in relation to its current fair value.
• The sale should be expected to take place within one
year from the date of classification.
• It is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn.

18. DEFINITIONS
• Disposal group - A group of assets to be
disposed of, by sale or otherwise,
together as a group in a single
transaction, and liabilities directly
associated with those assets that will be
transferred in the transaction.
• A non-current asset held for sale is one
where the carrying amount will be
recovered principally through sale rather
than through continuing use

19. MEASUREMENT
• A non-current asset (or disposal group)
that is held for sale should be measured
at the lower of its carrying amount and
fair value less costs of disposal.
• Non-Current assets held for sale are not
depreciated.

20. DISCLOSURE
In the period in which a non-current asset
has been classified as held for sale or sold
the following should be disclosed.
• A description of the non-current asset (or
disposal group)
• A description of the facts and
circumstances of the disposal
• Any gain or loss recognized when the
item was classified as held for sale

21. DISCLOSURE
CONT….
An entity should disclose a single amount
in the
Statement of profit or loss comprising of;
• Post Tax profit or loss of discontinued
operations
• Gain or loss recognized on measurement
of fair value less cost on disposal.
The entity should also disclose an analysis
of single amount into:
• Related income tax expense

22. THE END
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