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DISCONTINUED OPERATIONS
(PFRS No. 5)
Objective of PFRS 5 to specify the accounting for assets held for sale and the
presentation and disclosure of discontinued operations.
a. Assets that meet the criteria to be classified as held for sale
to be measured at the lower of carrying amount and fair value less costs to sell
depreciation on such assets to cease.
b. Assets that meet the criteria to be classified as held for sale
to be presented separately on the face of the balance sheet
the results of discontinued operations to be presented separately in the income
statement.
A discontinued operation as a component of an entity that either has been disposed of or is
classified as held for sale and:
represents a separate major line of business or geographical area of operations.
is part of a single coordinated plan to dispose of a separate major line of business or
geographical area of operations
is a subsidiary acquired exclusively with a view to resale.
A component of an entity may be
a subsidiary,
a major line of business or
geographical segment
whose operations and cash flows can be clearly distinguished , operationally and for financial
reporting purposes from the rest of the entity.
A component can be clearly distinguished operationally and for financial reporting purposes if its
assets
liabilities
revenues
expenses
are directly attributable to the component.
Timing of Reporting a component is classified as discontinued operations at the date
the entity has actually disposed of the operation or
when the operation meets the criteria to be classified as held for sale.
PFRS 5 prohibits the retroactive classification as a discontinued operation when the
discontinued criteria are met after the balance sheet date.
d. If subsequently, there is an increase in the fair value less cost to sell, a gain may be
recognized but not to exceed the impairment loss previously recognized.
e. A non current asset classified as held for sale shall not be depreciated.
Special Notes
a. An entity shall not classify as held for sale a non current asset or disposal group that is to
be abandoned because its carrying amount will be recovered principally through
continuing use.
b. If the assets to be abandoned are a major line of business or geographical area of
operations, they are reported as discontinued operations at the date on which they are
actually abandoned.
c. An entity shall measure the non current asset that ceases to be classified as held for sale
at the lower of
carrying amount before the asset was classified as held for sale adjusted for any
depreciation or amortization that would have been recognized if the asset had not
been classified as held for sale
recoverable amount at the date of the subsequent decision not to sell.
d. The assets and liabilities of a disposal group shall be presented separately and cannot be
offset against each other.
e. The assets of a disposal group shall be presented as a single amount and described as
non current assets classified as held for sale under current assets.
f. The liabilities of the disposal group shall be presented as a single amount and described
as liabilities associated with non current assets classified as held for sale under current
liabilities.
July 2009