+ free IFRS mini-course. But, it also means, that you WILL need to assess the criteria for presenting the abandoned asset or operation as discontinued operation. (IFRS 5.32). Dear Hesham, Dear Slivia Regards. If the Group has sold subsidiary company (the major seperate business line) in 2018, but has not prepared financial statements for previous years. S. Hope you are well. Asset held for sale can depreciate if still in operation?We are doing the impairment loss instead. So, if you or your company plans to sell some non-current assets and discontinue some operations, then IFRS 5 is for you. After Issuance IFRS – 17 or the IFRS- 17 Still Not Not implemented yet. If a company has a wholly owned subsidiary for 10 months in the year and then dilutes its shareholding such that the sub becomes a JV, will this be treated as a discontinued operations? Please see my explanation below Hesham’s comment. In line with IFRS 5, we are to present the assets and liabilities of subsidiary held for sale as one line. Hi Josh, although not explicitly said in the standard – yes, you in fact do need to present it separately. S. Following Edmundo Gomez s question, in his case, shall we cease depreciations after booking impairments? Assets arising from employee benefits (IAS 19 Employee Benefits). My question is how do we value “Adjusted Carrying Amount” when measuring Impairment after classifying as held for sale? – Each course focuses on the application of the standards in multiple problem scenarios. under licence during the term and subject to the conditions contained therein. the operations were in fact not stopped but the division was transferred to the other entity on on-going basis. However, IFRS 5 lists a few measurement exceptions (IFRS 5.5): Deferred tax assets (IAS 12 Income Taxes). Q1: Does this comply with terms of discontinued operation? The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to a. the machinery account. Things are clear now. Dear Wilson, as soon as it meets all the above stated conditions for classifying as held for sale, then yes (e.g. Thanks in advance. Your article has indeed elevated my knowledge of IFRS 5. – The modules discuss real-life scenarios that demonstrate the application of the standards. So, you say that in 2015, inventory in continuing operation was 13 000 and discontinued 7 000 = total 20 000. Non-current assets that are accounted for in accordance with the fair value model in. Should we depreciate the assets despite the fact the division does not work? Rule-based frameworks are more rigid and allow less room for interpretation, while a principle-based framework allows for more flexibility. S. I read some of the comments below, and someone asked about how you would treat an abandoned asset. In hindsight I wish I had completed the IFRS Certificate Program first as it covered many issued that I came across through my work. Hi DB, Thanks for the good work and helping us. Maybe if you are more specific, then we can look to this closer. More specifically, you should present (IFRS5.33): The analysis of a single amount shall be reported in the notes or in the statement of comprehensive income. Test Bank for Intermediate Accounting: IFRS Edition 10 - 10 33. AACSB: RT AICPA BB: CT AICPA FN: Reporting. Dear Silvia, – The course material includes audio files, video lectures, interactive exercises, and case studies. not measured at FV less costs to sell). Or geographical location? hello Sylvia, Please check your inbox to confirm your subscription. It equips you with the training, knowledge, and practical guidance required to use IFRS. IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations Quiz Free IFRS Quizzes IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations Quiz ) , () ) Previous Lesson. Op deze pagina vindt u IFRS-gerelateerde content zoals artikelen over IFRS-standaarden, de verschillenanalyses NL-GAAP/IFRS en door ons ontwikkelde tools. Test Bank for Intermediate Accounting: IFRS Edition, 2e. 1-6. This site uses cookies. Check out our Best Finance Courses.Â, Deloitte’s e-learning modules on IFRS help you improve your knowledge and application of the basic principles and concepts of the IFRSs and IASs. For example, a car dealer presents all vehicles for resale under IAS 2 Inventories, not under IFRS 5. The only exception is when a company regularly sells assets normally considered as non-current. yes, of course. On December 2017, it was more likely than not that the carrying amount of assets will be recovered through sale rather than trough continuing use. However, at the same time, if you are not going to sell the division, it is NOT classified as held for sale and not accounted for as such. Test bank For Essentials of Sonography and Patient Care 3rd Edition by M. Robert de. Keep it up . your contribution is remarkable and unforgettable is only GOD will reward you for that, i will be happy if you can help me with CD lecture. However, you need to provide the breakdown of this amount in the notes to the financial statements (or on the face of the statement, as you wish). I think that the company just generated expenses. During the middle of the following year, we have not completed the sale yet. please, if you do not have the fair value for an assets classified as held for sale, can you use the carrying amount? Then the ownership interest of 2 subsidaries are being sold away, leaving the last subsidiary as the only one maintaining the segment. thank you. Hi SIlvia. Dear Lexo, as soon as you have discontinued operation, then you have to perform impairment testing of your assets. Hello silvia! I have a division which is part of plan to disposed off. Sometimes, they are identical, sometimes, assets held for sale is a subgroup of discontinued operations. I use this opportunity to thank you so much for your great website, articles and videos that really helped us a lot. IFRS 5 focuses on two main areas: 1. Is this mandatory in case of discontinued operations? The question: is this adjusting or non-adjusting event? I have a question, when there is a discontinued operation recognized (NOT held for sale) we report this division separately, and we depreciate all assets as before or we stop depreciating as in the case of assets held for sale? All Rights Reserved. Hello Silva, BPP Chap 13 examples. For example, this segment is in media business, so all 3 are media companies. financial instrument held for sale will still be measured under IFRS 9, not IFRS 5). Hi silvia, I have a questions regarding on the recognition of impairment losses and reversals. So, if you want to sell a CGU, then it’s both a disposal group (asset held for sale) and discontinued operation (by definition), and therefore you need to measure it at fair value less cost to sell + disclose it separately in your P/L and SoFP. redundancy payments as a result of the restructure but not directly related to the. But, it is not a discontinued operation in this case, because it is not a component of an entity – it’s just an asset. Dit Excel-bestand geeft een overzicht van de ondernemingen die in de periode 2010-2019 een geconsolideerde jaarrekening bij de Nationale Bank hebben neergelegd. They are disappointed with the fact the first sale was so unsuccessful. In 2016, inventory for discontinued operation will be 0. So nice of you to help us out in a quick and easy manner. Coursera has an interesting mix of courses in IFRS.  Accounting, Business, and Society: The Multi-faceted Role of Accounting by the Hong Kong University of Science and Technology provides an overview of the multi-faceted role of accounting. How should this expense be treated? Non-current assets held for sale [ edit ] If a non-current asset is 'held for sale', the economic benefit of that asset is obtained through the asset's sale rather than through its continuous use in the business (future economic benefit). The reason is that although you don’t change their accounting treatment, you change their presentation and disclosures. I’m unsure. Inventory(30/6/2018) 5 900 000 My understanding is that this case does not respresent a discontinued operations, and income and expenses of disposed subsidiary should be consolidated line by line till the date of disposal (and not in single line of discontinued operations). The carrying values were taken as is (i.e. or as an impairment. Magazines. Shall we increase the value upto FV-CTS of NCA-HFS ? My question is for after the asset is sold over a year end. Given the context, can we expense all related expenses (i.e. IFRS seems to speak about the comprehensive income statement only. in the split between continuing (13 000) and discontinued (7 000) operation. 036: Contract asset vs. account receivable, It specifies the accounting treatment for, It sets the presentation and disclosure requirements for. How can we account the asset held for sale and the accounting for the discontinued operation. Well, it means that you will NOT apply “held-for-sale accounting”, i.e. In de lijst is onder meer vermeld of de geconsolideerde jaarrekening al dan niet volgens de IFRS standaard is opgemaakt. In this case, these sales represent one of primary activities and the related assets are inventories in fact. Hi Silvia, In that case (argueing that the subsidiary represents a major line of business), does the disclosure of discontinued operations apply? If a disposal group has been disclosed as held for sale, does it impact going concern considerations? So, if you have already discontinued the operation, the assets are not used anymore and they will NOT be sold, then basically they are impaired and their carrying amount should be reduced to zero (or to their residual value). For example, when you decide to stop one division, then you have a discontinued operation and you need to disclose it separately in the financial statements. I would like to discuss the difference between the assets held for sale and the discontinued operations. De oudere IAS-standaarden zijn niet komen te vervallen maar zijn uitgebreid en verder uitgewerkt. Two buyers actually attended the sale process, paid the deposit, however, eventually both of them gave up on buying the factory for other reasons. I think you got it just partially right. Hi Management has not changed the intention to sell the PPE after December 31, however, it does not seek for a buyer anymore actively. IAS 16 outlines the accounting treatment for most types of property, plant and equipment. It is a component of an entity (understand: a cash-generating unit or a group of cash-generating units) that either has been disposed of or is classified as held for sale, and at the same time: Once you identify a discontinued operation, you should present it separately from other continuing operations in your financial statements. Right? In general terms, assets (or disposal groups) held for sale are not depreciated, are measured at the lower of carrying amount and fair value less costs to sell, and are presented separately in the statement of financial position. Therefore, the users of financial statements, mainly investors, should be informed about these events. Hi Asad, if you stopped operations in that division, then yes, it’s a discontinued operation and you should report it separately from other assets. Related to the topic, I have a question relating to the accounting for other side, when a company has discontinued operation or a disposal group, however instead of selling it company decides to create a separate entity (with same shareholders) and give this assets to that company (demerger of a sort however, the assets/liabilities in a new company were classified as discontinued operations), can you reference me what the accounting in the new entity for this assets/liabilities/equity should be. When a company (or another entity) plans to sell an asset and / or stop some part of its business, then it might affect its future cash flows, profitability and overall financial situation. The standard requires such assets to be no longer depreciated and presented separately from other assets on the balance sheet. If say in the above example, the segment is operated by 3 subsidiaries together. RE or gain? It is the nature of operations, since the segment is based on the type of business done. Dear Ashvin, Now when we prepare Statement of financial position for continuing operation the comparative period 2015 should be $20,000 less 7,000 = $17,000 ? The reason is that by 31 December 2016, you have already got the sufficient evidence that the fair value of a hotel is much higher than its carrying amount. In BBP, eg 1. Don’t forget to check our Best Audit Courses. sorry for the long question. Review: First time I have learned online, great experience, deeply explained instructor -Kumar Mudaliar. – for discontinued operation, you need to make appropriate disclosures in the financial statements. Is part of a plan to dispose it of, or Putting some numbers to this: Explain double-entry rules. After business transfer subsidiary is not having any business. IFRS 5 sets out specific requirements for presentation and disclosure of discontinued operations. CHAPTER 5 STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS CHAPTER LEARNING OBJECTIVES 1. After you classify an asset as held for sale, you would recognize any impairment loss in profit or loss only. Can you please explain in detail? and all liabilities of that division would represent a disposal group. Thank you for this. We assume the FV less costs to sell is lower than the carrying values. A quick one, if a disposal group is held for sale in year 2017 and assets and liabilities presented as a separate line in the financial position, what happen to comparative year 2016, are we going to retrospectively classify in 2016 too? During 2016 negotiations with buyer took place. IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations. IFRS - International Financial Reporting Standards. i have a question regarding how i treat the entries under ifrs 5 when calculating total Carrying Amount This article was really helpful to me thank you so much Silva. Is the income here the net of the proceeds and Net Book Value(Carrying Amount) or just the proceeds? Will the income be R640000? thank you for your comment. How about the other asset that are not within the scope of IFRS 5 such as deferred tax expense and so on? Please advise how I would go about classifying this? I would like to ask that if a company has a reportable segement (a division in opertion) and related PPE items (land, building and equipments) as per IAS 16 and during the year stop the operations and rent out the whole division to its subsidiary company. Q2: Do I need to present discontinued operation if i want to prepare Interim Condensed financial information for Q3 as of Septmber 30, 2018 or is this represent disposal such as any disposal in assets? Moreover, you can practice lots real examples to the life to improve effectively your knowledge and … Thanks for your knowledge sharing. Hi Silvia, there is a plan, asset is marketed etc.). Do you just do an adjustment on the fair value that has increased? Management must be committed to a plan to sell the asset; An active program to find a buyer must have been initiated; The asset must be actively marketed for sale at a price reasonable to its current fair value; The sale is expected to be completed within 1 year from the date of classification; Significant changes to the plan are unlikely. – The course material includes video lectures, articles, and other downloadable resources. I am sure there will be the right explanation . Thank you. IFRS Certificate Program (The American Institute of Certified Public Accountants), 6 Best + Free Mac Courses & Classes [DECEMBER 2020], 8 Best Real Estate Finance Courses & Classes [DECEMBER 2020], 18 Best Investment Courses & Certification [DECEMBER 2020], 5 Best Macroeconomics Courses & Certification [DECEMBER 2020], 6 Best + Free Day Trading Courses & Classes [DECEMBER 2020], 8 Best Financial & Capital Markets Courses [DECEMBER 2020] [UPDATED], 8 Best + Free CAPM Courses & Classes [DECEMBER 2020]. Thanks again. I have an unlisted publisher company, revenue is driven from 1. Ahsan, Previous Section Next Section . Required Assuming that it meets the criteria of NCA held of sale. asset/disposal group must be available for immediate sale in its present condition and Will it be R640 000 or do you deduct the vat amount that is included in the R80000 for each vehicle and then income would be R 556520 (but what is the useful life?) One relating to Health etc; We are hoping to find a suitable buyer for this sub-division once the economy has recovered. e.g. 1 . You know that completing 40 Free Test Bank for Intermediate Accounting IFRS Edition 2nd Edition by Kieso which is one of ways to learn all chapter contents included in this textbook. Do you deduct the vat inclusive or not They haven’t made the sale as yet. For example, a line that says “Amounts in equity relating to non-current assets held for sale”. Do you simply just Dr Non-current assets held for sale and Cr Fair-value adjustment? We hope that you found a course that will help you meet your learning goals. You are contributing more. Dear Silvia, Thank you Silva. Gannon Company acquired 6,000 shares of its own ordinary shares at $20 per share on February 5, 2010, and sold 3,000 of these shares at $27 per share on August 9, 2011. There is a buyer, but the asset was not actively marketed for sale. You sell them enter to one single amount ( as specified below ), deeply explained instructor Mudaliar. Go hand in hand and Tutorials online presents all vehicles for resale under 40! Is principle-based while GAAP is rule-based 10 - 10 33 assets as held for sale can depreciate if still operation! Not within the scope of IFRS 9 Financial Instruments amount ” when measuring impairment after classifying as for... Inventory during comparative period 2015 should be done in the standard – yes, sales... You to help US out in a similar case as above, except that subsidiary! Of Sonography and Patient Care 3rd Edition by M. Robert de you agree to the that price... An unlisted publisher company, prepared in accordance with International Financial Reporting Standards you need present... Be 0 you learn more about IFRS it separately the BPP book solutions of... Seems to speak about the comprehensive income separately and that affects the equity, too these sales one. 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As of December 31 not IFRS 5 ) sales represent one of activities., interactive exercises, and someone asked about how you would measure an item of property plant...

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