PFRS 5

Non-current Assets Held for

Sale and Discontinued
Operations
 What is the purpose of PFRS 5?
To specify the accounting trearment for assets held
for sale
To set presentation and disclosure of discontinued
operations
Assets Held for Sale
Non-current assets or disposal groups
shall be classified as held for sale
when their carrying amount will be
recovered through a sale rather than
through a continuing use.
Exceptions
When you sell non-current
assets in your primary
business.
Disposal Groups
Somtimes, companies plan to
sell or discontinue a group of
assets and liabilities in a single
transaction.
How do we assess if an asset's carrying amount
will be recovered through a sale?
• The asset must be available for sale in its present
condition
• Sale must be highly probable
Management is commited to a plan to sell
Active program to locate the buyer initiated
Asset is marketed at a reasonable price
Sale should be completed within one year from the
date of classification
Assets/operations expected
to be abandoned do not
qualify as assets held for
sale.
Measurement
Lower of carrying amount and fair
value less costs to sell/distribute
Do we depreciate non-current
assets held for sale?
What are Discontinued Operations?
1.) A company eliminates a component of a
business.
2.) The company is not going to have any
significant involvement going forward.
ABC CORP.
 Presentation
Statement of Comprehensive Cash Flows
Income • Net cash flows attributable to
• Single amount comprising of the operating, investing, and
 Post-tax P/L of financing activities of a
discontinued operations discontinued operations
Post-tax gain/loss on the • Can be presented in the notes
measurement of FV - costs
to sell or disposal
• Analysis of the single amount
in the notes or statement of CI
 Presentation
Statement of Financial Position
Present separately in the face of the statement of FP:
• Assets classsified as held for sale
• Assets and liabilities in the disposal group
 Analysis of the single amount in the notes or statement of CI
On September 30, 2018, when the carrying amount of the net assets of
a business segment was P 70,000,000, Young Company signed a legally
binding contract to sell the business segment.

The sale is expected to be completed by January 31, 2019 at a selling

price of P 60,000,000.

In addition, prior to January 31, 2019, the sale contract obliged Young
Company to terminate the employment of certain employees of the
business segment incurring an expected termination cost of P 2,000,000
to be paid on June 30, 2019.

The segment revenue and expenses for 2018 were P 40,000,000 and P
45,000,000 respectively.

Before income tax, what amount should be reported as loss from

discontinued operation for 2018?
Selling Price 60,000,000
Carrying Amount 70,000,000
Impairment loss 10,000,000

Revenue 40,000,000
Expenses (45,000,000)
Impairment loss (10,000,000)
Termination cost (02,000,000)
Loss from discontinued (17,000,000)
operation