Subsequently, after you classified an asset as held for sale, you should measure it at lower of its carrying amount and fair value less costs to sell (except for measurement exceptions listed above). When is proceed on disposal of Non-Current Assets stated as other Income? cash proceeds 110 Q – Because you change the plan of asset and you going to sell the asset within one year, so can we still keep the revaluation reserve as it is? hi Ebarume, no, this will be treated as a change in a group composition. And coming to think of it, in case of a loss on shares: should an impairment on assets (mainly PP&E) have been performed first? Hello Silva, The price paid was the estimated fair value. The account titles used in journalizing transactions need not be identical to the account titles in the ledger. Q1: Does this comply with terms of discontinued operation? @Hesham, as per your 2nd question,I think the segment should be classified as discontinued operations. (IFRS 5.32), The post-tax profit or loss of discontinued operations, and. First of all, the asset or disposal group must be available for immediate sale in its present conditions and the sale must be highly probable. For example, a line that says “Amounts in equity relating to non-current assets held for sale”. Property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis over its useful life. Or geographical location? Books, 2.Online news platform and, 3. At Digital Defynd, we help you find the best courses, certifications and tutorials online. In een twaalftal Nederlandstalige artikelen over belangrijke gebieden van IFRS 15 geven Ralph ter Hoeven en Dingeman Manschot u handvatten bij de toepassing van deze belangrijke standaard. It discusses the concepts and principles of IFRS, teaches you how to indicate and apply the new standards on revenue recognition and leases, guide you in identifying the classification, recognition, measurement, and disclosure of financial statement assets and liabilities, and shows you how to calculate tax amounts to be recognized in the financial statements. Financial assets within the scope of IFRS 9 Financial Instruments. Or the opposite situation. and cont. When preparing financinal statement for 2016 should it present that subsidiary sold as held for sale? you do account for it under IFRS 5 – the only exception is that you should discount the cost to sell to its present value. IAS 2 Cost Formulas: Weighted average, FIFO or FOFO?! Assuming that it meets the criteria of NCA held of sale. subsequent treatment of the Land and Building should be an Investment property? Therefore, the users of financial statements, mainly investors, should be informed about these events. 1) Yes, these 2 are closely linked. In my opinion, I would leave revaluation surplus as it is until asset is derecognized. However, as for the reversal of impairment loss, I would recognize it in 2016. I just want to ask you, if NCA hed for sale is not classified as held for sale, the financial statment should be restated? Inventory during comparative period as at 2015 was $20,000 and $7,000 is part of discontinued operation. It is the nature of operations, since the segment is based on the type of business done. (IFRS 5.32). or as an impairment. Hope it’s clearer S. Thank you Silvia for your time writing this comprehensive answer. I want to ask you if XYZ company sold one of it’s subsidiaries on August 31, 2018, also they decided to sell this investment on August 2, 2018. my question is 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. University of Pennsylvania’s More Introduction to Financial Accounting teaches you how to read, understand, and analyze most of the information in the financial statements of companies.  Accounting Data Analytics with Python by the University of Illinois focuses on developing Python skills for assembling business data. IFRS - International Financial Reporting Standards. 2. i have a question regarding how i treat the entries under ifrs 5 when calculating total Carrying Amount 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? expenses to sell (charged to P&L in year occurred) 10. CHAPTER 3 THE ACCOUNTING INFORMATION SYSTEM CHAPTER LEARNING OBJECTIVES 1. You will still need to present these assets separately from others and disclose some additional information. I know that there are two separate components: 1. And i do both wen its discontinued aswell as i intend to sell them. It means that if you derecognized your assets in their carrying amounts on disposal without revaluation to fair value less cost to sell, it’s OK, but you need to analyze total gain/loss on the disposal and calculate the amount attributable to remeasurement to fair value less cost to sell, and amount representing the gain/loss on the disposal. The price was higher than what was estimated in 2015, therefore the quesiton is, whether impairment reversal should/could already be recognised in 2016? Keeping up with Change: Issues for the Finance Professional by the University of London identifies and explores challenges to the finance professional arising from the ever-changing business environment. Hi Sofia, you need to look at what’s the primary factor defining the segment in this case – is it the nature of operations? Would ROU recognized on leases be required to be accounted for under IFRS 5 in subsidiary A’s book? Outline the accounting treatment for the group assets in terms of IFRS 5 on 30/06/2018, if an assets is sold on going concern basis eg running business . Non-current assets that are measured at fair value less costs to sell in accordance with IAS 41 Agriculture. Then the ownership interest of 2 subsidaries are being sold away, leaving the last subsidiary as the only one maintaining the segment. Now, if you plan to sell machinery of this division, then you have assets held for sale. I am battling to distinguish whether or not IFRS 5 applies or not. Regards, After one year the FV-CTS is greator than CA, then what to do ? – post-tax gain or loss recognized in the re-measurement to fair value less costs to sell or on the disposal of assets constituting the discontinued operation. So the media business is only one among many other segments. Therefore, you need to test assets for any impairment and at the same time, you need to present them separately from continuing operations in your financial statements (well, if a company plans to close one part of a business). That’s the main measurement principle of IFRS 5. IFRS 5 Non-cash Assets Held for Sale and Discontinued Operations The Board has not undertaken any specific implementation support activities relating to this Standard. Dear redhotar, How does the impairment loss is recognized? I’m not sure I got it fully. Ahsan, 2)In case the management didnt classify asset group for sale in prior financial year,but slod a group of asset on following year.will this issue be treated as a departure from IFRS 5? In 2016, inventory for discontinued operation will be 0. Additionally, the entity is planning to sell part of its b… MY question is 1) We need to disclosure the net profit on sale (and should this be the proceeds less the carrying value of net assets less direct sale costs?). S. Dear Silvia M, Thank u very much for the articles indeed! Based on the above explanation, is it true that most likely there will be some assets held for sale issue, but it is not a discontinued operation? The chart of accounts is a special ledger used in accounting systems. not measured at FV less costs to sell). – Once you pass the assessment at the end of each module, you will receive a printable certificate. Review: First time I have learned online, great experience, deeply explained instructor -Kumar Mudaliar. Thanks in advance. Can you please explain in detail? The Group as an overall has other types of business. 1)Is this IFRS equally applicable for NGO’s FS repoeting? IFRS 5 sets a few criteria for the sale to be highly probable: The similar criteria also apply to assets held for distribution to owners. 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? Chartered Education IFRS MCQs have more than 1,100 questions. Component of an entity is defined as operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity (IFRS 5… Dear Silvia, – After completing an IFRS course, you can pay a small fee and obtain a sharable course certificate. Two buyers actually attended the sale process, paid the deposit, however, eventually both of them gave up on buying the factory for other reasons. report “Top 7 IFRS Mistakes” or all the adjustments should be done in the current year. 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