Hi Silvia, Now when we prepare Statement of financial position for continuing operation the comparative period 2015 should be $20,000 less 7,000 = $17,000 ? and all liabilities of that division would represent a disposal group. For E.g. Please check your inbox to confirm your subscription. Moreover, you can practice lots real examples to the life to improve effectively your knowledge and … Try a free IFRS 15 Revenue from Contracts with Cutomers quiz and test your knowledge. 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. 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 properties were all sold in the this year and the transaction was only known about a month before it happened., hence we never moved them to held for sale in the prior year Financial Statements. Please explain. When I lookup guidance from a Big4 firm, they note that the income statement should reflect the result form discontinued operations as well. The contract was signed on January 5, 2017. 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. S. Dear Silvia M, Thank u very much for the articles indeed! Regards. Dear Silvia, Yes, it’s a discontinued operation, but there are also assets or disposal groups held for sale too. Review: This course gives a very good overview and fairly comprehensive examples of IFRS and GAAP to IFRS differences. You are contributing more. thank you. The question: is this adjusting or non-adjusting event? 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. If you run a car business and you sold 8 cars for R80000 each, 15% vat inclusive. please, if you do not have the fair value for an assets classified as held for sale, can you use the carrying amount? Two buyers actually attended the sale process, paid the deposit, however, eventually both of them gave up on buying the factory for other reasons. In my opinion, I would leave revaluation surplus as it is until asset is derecognized. In 2016 they did not plan to sell that subsidiary. The account titles used in journalizing transactions need not be identical to the account titles in the ledger. In that case (argueing that the subsidiary represents a major line of business), does the disclosure of discontinued operations apply? 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. Dear Silvia, With regard to any impairment, immediately before classification as held for sale, the impairment is recognized in line with the applicable IFRSs, for example, under IAS 36 for property, plant and equipment. in your case the gain = 0. Back to Course Next Lesson. If say in the above example, the segment is operated by 3 subsidiaries together. – 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. Op deze pagina vindt u IFRS-gerelateerde content zoals artikelen over IFRS-standaarden, de verschillenanalyses NL-GAAP/IFRS en door ons ontwikkelde tools. I have a division which is part of plan to disposed off. Thanks for your knowledge sharing. Do you think IFRS 5 is applicable here? IFRS - International Financial Reporting Standards. S. Hope you are well. Does it make any sense? You recognize the impairment loss first. Cathy. After business transfer subsidiary is not having any business. 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. -30/06/2018 3 480 000 I’ve really been struggling with this. Accounting 101: International Financial Reporting Standards goes beyond International Financial Reporting Standards and discusses how they differ from US GAAP Accounting for 2019. Hello, Silvia your teaching materials including Video lecture regarding IFRS is so interesting. Het beheer van de standaarden is in handen van de International Accounting Standards Board (IASB). I know that there are two separate components: 1. â After completing an IFRS course, you can pay a small fee and obtain a sharable course certificate. Check out our Best Finance Courses.Â, Deloitteâs e-learning modules on IFRS help you improve your knowledge and application of the basic principles and concepts of the IFRSs and IASs. The fair value was estimated again, company actively searched for a buyer etc. Books, 2.Online news platform and, 3. Likewise, i want to sell a CGU which is not discontinued but running in loss, i hv to present its asset separately in SOFP as Classified as HFS, but do not give separate disclosure of its Profit/loss in PL? Is part of a plan to dispose it of, or However, the subsidiary is not considered as a separate major line of business and hence does not represent a discontinued operation, should it still be classified as an NCA held for sale then? IFRS 15 Praktische handvatten IFRS 15 - Revenue Recognition. 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?). IFRS 5 refers to the International Financial Reporting Standards relating to Non-current assets held for sale and discontinued operations. Your explanations are fantastic and very enlightening. â The modules discuss real-life scenarios that demonstrate the application of the standards. subsequent treatment of the Land and Building should be an Investment property? Please watch the following video with a summary of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: report "Top 7 IFRS Mistakes" + free IFRS mini-course. Inventory(30/6/2018) 5 900 000 no “exceptionals line”). I use this opportunity to thank you so much for your great website, articles and videos that really helped us a lot. or as an impairment. One relating to Health etc; We are hoping to find a suitable buyer for this sub-division once the economy has recovered. Assets held for sale – on top of disclosures, you need to measure them at fair value less cost to sell. Non-current assets that are measured at fair value less costs to sell in accordance with IAS 41 Agriculture. (but what is the useful life?) i have a question regarding how i treat the entries under ifrs 5 when calculating total Carrying Amount I hope it’s what you asked. Solution manual for Intermediate Accounting IFRS Edition 2nd Edition kieso. Or in other words, should both NCA held for sale and discontinued operations go hand in hand? Statement of Financial Position before sales commenced. I see both concepts are same but do not know when a company can recognize the first or to recognize the second. I have a query regarding the disclosure for the Financial Statement. BPP Chap 13 examples. and cont. University of Pennsylvaniaâs More Introduction to Financial Accounting teaches you how to read, understand, and analyze most of the information in the financial statements of companies.Â Accounting Data Analytics with Python by the University of Illinois focuses on developing Python skills for assembling business data. â The modules are available free of charge. Explain the uses and limitations – post-tax profit or loss of discontinued operations (I guess all the related expenses would come here) and also + free IFRS mini-course. For example, you would measure an item of property, plant and equipment under IAS 16. IFRS 5 Non-current Assets held for Sale and Discontinued Operations Accounting summary 2017 - 04 1 Objective The objective of this IFRS is to specify the accounting for assets held for sale, and the presentation and disclosure of discontinued operations. So nice of you to help us out in a quick and easy manner. 1)Is this IFRS equally applicable for NGO’s FS repoeting? Given the context, can we expense all related expenses (i.e. 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. Maybe if you are more specific, then we can look to this closer. 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). In a similar case as above, except that the management has not disposed the subsidiary yet. 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. It specifies the accounting treatment for assets (or disposal groups) held for sale, and 2. 036: Contract asset vs. account receivable, It specifies the accounting treatment for, It sets the presentation and disclosure requirements for. If you are renting the land and building out, then it’s logical to classify it as investment property under IAS 40. Management has not changed the intention to sell the PPE after December 31, however, it does not seek for a buyer anymore actively. IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations . We wish you Happy Learning! @Hesham, as per your 2nd question,I think the segment should be classified as discontinued operations. Investments (1/07/2017)(fair value) 15 000 000 However, as for the reversal of impairment loss, I would recognize it in 2016. This course aims at imparting knowledge on how to understand and apply the fundamental concepts and principles of IFRS across accounting standards. 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. Meanwhile, the factory is working full-time and producing goods. You have a building that you plan to sell and it meets the definition of asset held for sale. With regard to IFRS 5, the standard mentions that we should measure a non-current asset HFS at the lower of its carrying amount and fair value less costs to sell. 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). Dear Slivia During 2016 negotiations with buyer took place. â You can share the certificate with employers through your LinkedIn profile and resume. Can you please explain in detail? Markup is 45% on cost. In this case, these sales represent one of primary activities and the related assets are inventories in fact. Hi Max, I explained the link between NCA held for sale and discontinued operations above, in my reply to Hesham – I would be just repeating what I wrote there. (IFRS 5.32). RE or gain? â The course is developed by subject matter experts from across the globe. you do account for it under IFRS 5 – the only exception is that you should discount the cost to sell to its present value. 47. Disposal group is a new concept introduced by IFRS 5 and it represents a group of assets and liabilities to be disposed of together as a group in a single transaction. Explanations are really great. 3. Dear Silvia, Dear Silvia. 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). The full 3 months were reported under IFRS 5 as discontinued operation. IFRS Financial Reporting covers conceptual details of various IAS and IFRS standards in-depth. My question is how about the components of equity? S. Hi Silvia, congratulation for your website and thank you for your contribution, I have a doubt, when a company plan to close, can I present PPE as a assets held for sale? 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? (IFRS 5.32), The post-tax profit or loss of discontinued operations, and. An entity has agreed in a directors’ meeting to sell a building, and has tentatively started looking for a buyer for the building. Should the factory stop being depreciated? Please advise. If you use cost model under IAS 40, then it is not an exception. Well, Fahim, what advice do you need? Test Bank for Intermediate Accounting: IFRS Edition 10 - 10 33. Q: Once the NCA is classified as HFS what is the accounting treatment if management subsequenlty withdraw the decision and want to reclassify from HFS to NCA after reporting date. How can we account the asset held for sale and the accounting for the discontinued operation. hi Ebarume, no, this will be treated as a change in a group composition. (30/06/2018) fair value 18 000 000 Can you please differentiate in the concept between them? Inventory during comparative period as at 2015 was $20,000 and $7,000 is part of discontinued operation. I’m not sure I got it fully. Why have we classified these assets as held for sale though? I have a subsidiary which we intend to sale hence we classified it as asset held for sale. 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. good question – IFRS 5 does not say anything about it and IAS 16 says that you reclassify the revaluation surplus in equity when you derecognize the asset. They haven’t made the sale as yet. So, profit/loss on the disposal and all other revenues and expenses of discontinued operations enter to one single amount (i.e. The carrying values were taken as is (i.e. I’m unsure. Then the ownership interest of 2 subsidaries are being sold away, leaving the last subsidiary as the only one maintaining the segment. Q1: Does this comply with terms of discontinued operation? Dear Lexo, as soon as you have discontinued operation, then you have to perform impairment testing of your assets. 2) As written in answer 1) – the segment will be both discontinued operation and disposal group held for sale, therefore you need to 1) apply special accounting treatment as for disposal group held for sale and 2) present and disclose discontinued operation separately in the financial statements. My question is for after the asset is sold over a year end. All Rights Reserved. Hi Silvia, I want to thank you so much for your website and explanation to IFRS, it has demystified financial reporting for me. Dear Hesham, Learn vocabulary, terms, and more with flashcards, games, and other study tools. They are disappointed with the fact the first sale was so unsuccessful. 4. Right? â You can access Udemyâs IFRS courses using a computer, mobile phone or a TV. For example, a car dealer presents all vehicles for resale under IAS 2 Inventories, not under IFRS 5. In de lijst is onder meer vermeld of de geconsolideerde jaarrekening al dan niet volgens de IFRS standaard is opgemaakt. Copyright © 2009-2020 Simlogic, s.r.o. under licence during the term and subject to the conditions contained therein. 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). The post tax gain or loss recognized on the measurement to fair value less costs to sell a or on the disposal of assets or disposal groups. if consultancy fees and professional fees relate directly to the sale of your asset, then yes, these should be taken into account when estimating asset’s FV less cost to sell. Test Bank for Intermediate Accounting: IFRS Edition, 2e. Hi Joel, Hi Silvia The standard IFRS 5 lists some measurement exceptions and you can read about them in the later paragraphs, but you still need to present and disclose the information about these assets under IFRS 5. What if the Disposed Non Current Assets were never stated as Non-Current Assets Held for sale in the Hope it’s clearer S. Thank you Silvia for your time writing this comprehensive answer. So the media business is only one among many other segments. IAS 2 Cost Formulas: Weighted average, FIFO or FOFO?! Hello, may I kindly recommend looking to the BPP book solutions? Donât forget to check our Best Audit Courses. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations By:- Yohannes Negatu(ACCA,DipIFR) 2. However, the plans for reconstructing were not fulfilled, and the management decided to sell the factory. Will the income be R640000? Shall we increase the value upto FV-CTS of NCA-HFS ? cash proceeds 110 Dear Silvia, where the investment property is carried at cost rather than at fair value and is to be disposed of in the next financial year ending 31/12/2017, should the investment property be reclassified as assets held for sale? Well, it means that you will NOT apply “held-for-sale accounting”, i.e. Is it the lower of Carrying amount and Fair Value less cost to sell? The price was higher than what was estimated in 2015, therefore the quesiton is, whether impairment reversal should/could already be recognised in 2016? financial instrument held for sale will still be measured under IFRS 9, not IFRS 5). IFRS 5 specifies that you need to pay special attention to presenting any discontinued operation. On completion, any associated carrying values were disposed off against the proceeds received. Overview OBJECTIVE SCOPE CLASSIFICATION OF NON-CURRENT ASSETS (OR DISPOSAL GROUPS) AS HELD FOR SALE OR AS HELD FOR DISTRIBUTION TO OWNERS MEASUREMENT OF NON-CURRENT ASSETS (OR DISPOSAL GROUPS) CLASSIFIED … Shortly before starting the IFRS Certificate Program, I spent several months working on GAAP to IFRS issues for the first time in my career. And i do both wen its discontinued aswell as i intend to sell them. During the middle of the following year, we have not completed the sale yet. Contractual rights under insurance contracts as defined in IFRS 4 Insurance Contracts. The 110 comes in, you relieve the assets held for sale of 100, what about the 10. Whether you want to learn how to implement the IFRS codeâs specifics or a broad overview of international accounting, you should explore Udemyâs IFRS courses. All other assets not excluded in the above list must be measured at lower of their carrying amount and fair value less costs to sell. Yes – but only if you use fair value model under IAS 40. Have to perform impairment testing of your company plans to finish the closure within 1,! I see both concepts are same but do not know when a company can recognize the.! Correct one point in the ledger which ifrs 5 test bank all taxes other than those income. Given the context, can we expense all related expenses ( i.e oudere IAS-standaarden zijn niet komen te vervallen zijn! Ias 16 CT AICPA FN: Reporting that are not “ costs to sell sell machinery of this.... Accounting Standards Board ( IASB ) is non-adjusting event in a similar case as above, except the! Subsidiary a ’ s business the property, plant and equipment under IAS.... 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Other revenues and expenses of discontinued operations there would be no longer depreciated and presented separately from other on! When preparing financinal statement for 2016 should it present that subsidiary sold ifrs 5 test bank held for sale and discontinued operations?.
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