IFRS 5

In this lesson

1. 0:00 IFRS 5: Non-current assets held for sale
2. 0:43 Disposal groups and measurement basis
3. 1:05 Classification criteria for held for sale
4. 1:38 Initial measurement and impairment rules
5. 2:12 Depreciation, gains and presentation
6. 3:02 Disclosure requirements in notes
7. 3:52 Reclassification when plans change

About this lesson

This video covers the classification criteria you must meet, how to measure these assets at the lower of fair value less costs to sell or carrying amount, and the presentation and disclosure requirements in your financial statements. You'll also understand what happens if a sale plan changes or falls through, and how to reclassify assets back to normal use. IFRS 5 applies whenever your entity intends to dispose of a significant asset or disposal group rather than continue using it. The standard requires strict conditions to be met before classification: the asset must be available for immediate sale in its present condition, management must be committed to the sale, there must be an active program to find a buyer, and the sale must be highly probable within 12 months. Once classified, the asset is written down to the lower of its fair value less selling costs or its carrying amount, with any impairment loss recognised in profit or loss. Importantly, held for sale assets are no longer depreciated or amortised, and gains on subsequent revaluation cannot exceed cumulative impairment losses previously recognised. On your statement of financial position, these assets are presented separately within current assets, with any associated disposal group liabilities also shown separately. Your notes must disclose the nature of the asset, the circumstances and timing of the sale, any impairment movements, and the reportable segment affected. If circumstances change and the sale no longer happens or falls outside the 12-month window due to factors beyond your control, you can reclassify the asset back to normal use, measuring it at the lower of its original carrying amount (adjusted for depreciation) and its recoverable amount at the date of reclassification.

Duration: 5m