443 / 488
Chapter
37/
Noncurrent Assets Held / or Sale and Discontinued Operations (IFRS
5)
431
5.6 An y impai rment lo ss recognized for a di sposal gro up sho uld be applie d in th e order set out in
lAS 36.
5.7 Noncurrent as se ts or di sp osal gro ups cl assified as held for sa le shou ld not be depreci ated.
5 .8 Any interest or expenses of a di sposal group should continue to be provided for.
6. CHANGE OF P LANS
6. 1 If criteria for an asset to be cl assi fied as held fo r sa le are no longer met , then th e asset or di s–
posal group ceases to be held fo r sa le.
6.2 In thi s case , the asset o r d isposal group sh ou ld be value d at th e lower of th e carryi ng am ount
before the asset or di sposal group was cl assified as held for sale (as adjusted for an y subseq ue nt
depreci ation, amortization, or revaluation ) and its recoverable amount at the date of the deci sion
not to sel l.
6.3 An y adjustment to th e va lue sho uld be shown in income from continuing operati ons for the
period.
6.4 If an asset is removed fro m a di sposal gro up, the disposal group will continue to be classi fie d
as such only if it still me et s the criteria se t out in th e Standard.
6. 5 If the criteri a are not met, then th e indi vidual noncurrent assets of the gro up will be re viewed
to see if they meet the criteri a to be classifie d as held for sale .
7.
DISCLOSURE: NONCURRENT ASSETS
7.1 Non current ass ets held fo r sale and as se ts of di sposal gro ups mu st be di scl osed separate ly
from other as sets in the bal an ce sheet. The liabiliti es mu st also be disc losed se parate ly in th e
bal an ce sheet.
7.2 Se veral othe r di scl osures are required, including a de scription of the non cu rrent assets of a
di sposal gro up, a de scription of the fact s and c irc ums ta nces of the sale, and the ex pe cted manner
and timing of that di sposal.
7.3 A ny gain or loss recogn ized for impairment or any subsequent increase in the fai r va lue less
cost s to se ll sho uld a lso be shown in the applicab le segme nt in which th e noncurrent asset s or di s–
posal group is presented in accorda nce with lAS 14.
Case Study 5
Facts
Lynch, a parent entity, approved on June 30, 20X5 , a plan to sell its subsidiary, Pin. The sale is expected
to be comp leted on Sept ember 1, 20X5. The year-end of Lynch is July 31, 20X5, and the financia l
statements were approved on August 16, 20X5. The subsidiary had net assets of $ 15 million (including
goodwill of $2 million) at carrying value at year-end. Pin made a loss of $3 million from August I to
August 16, 20X5, and is expected to make a further loss of $2 million up to the date of sale. At the date
of approval of the financial statements, Lynch was in negotiation for the sale of Pin, but no contract had
been signed. Lynch expects to sell Pin for $9 million and to incur cos ts of selling of $ 1 million. The
value in use of Pin at August 16, 20X5, was estimated at $8 million.
Lynch had approved the relocation of the administrative headqu arters of the group. Lynch does not in–
tend to sell the property until it has renovated it. The renovations were compl eted on June 30, 20X5 .
However, on July 30, 20X5 , environ menta l contamination was found within the headq uarters that neces–
sitated the transfer of the staff to temporary premises. The hazard was removed at a cost of $50,000 and
the building declared safe on November 1, 20X5 . At July 31, 20X5, the carrying value of the buildin g
was $3 million and its market value (assuming no contamination) was $4 million before estimated sell–
ing costs of $500,000.
The administrative headquarters were moved on December I, 20X5, and the property was offered for
sale at a price of $4 million . The market for such property was in decline, and a buyer had not been
found by July 31, 20X6 . The market price at that date was around $3.5 million, but the entity refu sed to
reduce the sale price of the property. On September I, 20X6, a bid of $3.3 million was accepted for the
property and costs of $600,000 were incurred in its sale. The carrying value of the property at cost was
$2.8 million as of July 31, 20X6 .