Slfrs5 Non Current Assets Held for Sale and Discontinued Operations

8/12/2019 Slfrs5 Non Current Assets Held for Sale and Discontinued Operations

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SLFRS 5 Non CurrentAssets Held for Sale andDiscontinued OperationsSanath Wijesinghej g

Manager - BDO Partners

27th June 2012

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SLFRS 5- Non Current Assets Held for Sale and Discontinu ed Operations

27th June 2012

Outline

introduction

Introduction

ScopeandScopeExclusions

HeldforsaleClassification

HeldforsaleMeasurement

Disposal Groups

3

Groups

Disposalgroups heldforsalemeasurement

DiscontinuedOperations


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AccountingforAssetsheldforsale

PresentationanddisclosureofDiscontinuedOperations

a. AssetsclassifiedasHFStobemeasuredat thelowerofCAandFVLCS,and

depreciationonsuchassetstocease

b. HFSseparatelyintheSOFPandresultofdiscontinuedoperationsseparately

inSCI

4Outline


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Scope in


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Allrecognisednoncurrentassets

Alldisposalgroups

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Scoping of NCA held for distribution to

owners


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SLFRSpara5A

IFRICInterpretation17

BasisforConclusion 60underIFRIC17

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ScopingofNCAheldfordistributiontoowners Contd.


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7Outline

Scope Exclusion


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De erred axassets

Assetsarisingfromemployeebenefits

FinancialassetsunderLKAS39

NCAaccountedundertheFVModelinLKAS40

NCA thataremeasuredatFVLCSLKAS41

Contractualrights

under

SLFRS

4

8Outline


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Held for sale classification

SLFRS 5- Non Current Assets Held for Sale and Discontinued

Operations

27th June 2012

Basis iftheassets(ordisposalGroups)carryingamountwillberecovered

principallythrough asaletransactionratherthanthroughcontinuinguse Criteria;

Availableforimmediatesale

Highlyprobable

Managementcommittedtoplantosell

Ac veprogrammehas eenin ate

Assetismarketedatareasonablepricecomparedtofairvalue

Saleexpected

to

be

completed

within

1year

from

date

of

classification

(unlessbeyondtheentityscontrol,e.g.regulatoryapprovalrequiredfor

thesalePara.9andAppendixB).

9

DisposalGroup

Outline

Availability for Immediate Sale


Operations

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Anentityiscommittedtoaplantosellitsheadquartersbuildingandhasinitiated

actionstolocateabuyer.

Scenario(a)Theentityintendstotransferthebuildingtoabuyerafteritvacatesthebuilding.

Thetimenecessarytovacatethebuildingisusualandcustomaryforsalesofsuch

assets.Thecriterionofavailabilityforimmediatesalewouldbemetattheplan commitment dateplan date.

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Availability for Immediate SaleExample


Operations

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Scenario(b)

Theentitywillcontinuetousethebuildinguntilconstructionofanew

headquartersbuildingiscompleted.Theentitydoesnotintendtotransferthe

existingbuildingtoabuyeruntilafterconstructionofthenewbuildingis

completed(anditvacatestheexistingbuilding).Thedelayinthetimingofthe

transferoftheexistingbuildingimposedbytheentity(seller)demonstratesthat

thebuildingisnotavailableforimmediatesale.Thecriterionavailabilityforimmediatesalewouldnotbemetuntilconstructionofthenewbuildingiscompleted,evenifafirmpurchasecommitmentforthefuturetransferofthe

existing

building

is

obtained

earlier.

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Exception - Completion of Sales within 1 Year


Operations

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Anexceptiontotheoneyearrequirementinparagraph8appliesin

limitedsituationsinwhichtheperiodrequiredtocompletethesaleofa

noncurrentasset(ordisposalgroup)willbe(orhasbeen)extendedby

eventsorcircumstancesbeyondanentityscontrolandspecified

conditionsaremet(paragraphs9andB1)

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Exception - Completion of Sales within 1 Year


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Anentityinthepowergeneratingindustryiscommittedtoaplantosella

disposalgroupthatrepresentsasignificantportionofitsregulatedoperations.

Thesalerequiresregulatoryapproval,whichcouldextendtheperiodrequiredto

completethesalebeyondoneyear.Actionsnecessarytoobtainthatapproval

cannotbeinitiateduntilafterabuyerisknownandafirmpurchasecommitment

isobtained.However,afirmpurchasecommitmentishighlyprobablewithinone

year.Inthatsituation,theconditionsinparagraphB1(a)foranexceptiontothe

Example

oneyearrequirementinparagraph8wouldbemet.

13Outline

Held for sale measurement


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MeasurenoncurrentassetinaccordancewithapplicableSLFRSs/LKSs

Classifyasheldforsaleandmeasureatlowerof:

carryingamount

fairvaluelesscoststosell

Nosubsequentdepreciation

Discloseseparately

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Back

Outline


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Disposal group


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sposa group

Agroupofassetsandliabilitiestobedisposedoftogetherinasingle

transaction

Heldforsaleclassification

Samecriteriaassingleassetheldforsale

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Disposal groups held for sale measurement


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MeasureassetsandliabilitiesinaccordancewithapplicableSLFRSs

Classifyasheldforsaleandmeasureatthelowerof:

carryingamountand

fairvaluelesscoststosell

SLFRS assets allocated SLFRS assets

NosubsequentdepreciationofSLFRS5assets

Discloseassetsandliabilitiesseparatelyassinglelines donotnetoff

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Allocation of an impairment loss on a disposal group


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Theimpairmentlossisallocatedtononcurrentassetstowhichthe

measurementrequirementsoftheSLFRSareapplicable.Thelossis

allocatedtotheassetsintheorderofallocationsetoutinparagraphs

104 and122ofLKAS36

Example

Microsoft Office

Word Document

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Allocationofanimpairmentlossonadisposalgroup

Distribution of NCA to Owners -IFRIC 17


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Sometimesanentitydistributeassetsotherthancash(noncurrentassets)as

dividendstoitsownersactingintheircapacityasowners.

InterpretationappliestoNonreciprocaldistributionsofassetsbyanentitytoits

owners;

Distributionsofnoncashassets(e.g.PPE,BusinessasdefinedinSLFRS3,

OwnershipinterestinanotherentityordisposalgroupasdefinedinSLFRS5)

and

Distributionsthatgiveownersachoiceofreceivingeithernoncashassetsora

cashalternative.

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Distribution of NCA to Owners -IFRIC 17


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IFRIC17appliesonlytodistributionsinwhichallownersofthesameclassof

equityinstrumentsaretreatedequally.

DoesnotapplytoadistributionofNCAthatisultimatelycontrolledbythesame

partyorpartiesbeforeandafterthedistribution.

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BeforeDistribution

Distribution of NCA to Owners -IFRIC 17After Distribution


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Public

Shareholders

CompanyA

Public

Shareholders

CompanyA SubsidiaryB

SubsidiaryB

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Rational of Scoping NCA held for Distribution

to Owners


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Whenanentityhasanobligationtodistributeassetstoitsowners,the

carryingamountoftheassetswillnolongerberecoveredprincipally

throughcontinuinguse.TheIFRICdecidedthattheinformationrequired

byIFRS5isimportanttousersoffinancialstatementsregardlessofthe

formofatransaction

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Held for distribution to owners -Classification


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when the entity is committed to distribute the asset (or disposal

group) to the owners.

Criteria

Available for immediate distribution

Highly probable

Should be expected to be completed within one year from the

date of classification.

(probability of shareholders approval should be considered as

part of the assessment of whether the distribution is highly

probable)

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Held for distribution to owners measurement


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Classifyasheldfordistributiontoownersandmeasureatthelowerof:

carryingamountand

fairvaluelesscoststo distribute

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NCA to be abandoned


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Anentityshallnoclassifyasheldforsaleanoncurrentasset(ordisposalgroup)

thatistobeabandoned.Thisisbecauseitscarryingamountwillberecovered

principallythroughcontinuinguse. However,ifthedisposalgrouptobeabandonedmeetsrequiredcriteria,theentityshallpresenttheresultsandcash

flowsofthedisposalgroup asdiscontinuedoperationsinaccordancewiththe

guidancegiveninrelevantparagraphsintheStandard.

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NCA to be abandoned


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InOctober20X9anentitydecidestoabandonallofitscottonmills,which

constituteamajorlineofbusiness.Allworkstopsatthecottonmillsduringthe

yearended31December2010.Inthefinancialstatementsfortheyearended

31December20X9,resultsandcashflowsofthecottonmillsaretreatedas

continuingoperations.Inthefinancialstatementsfortheyearended31

December2010,theresultsandcashflowsofthecottonmillsaretreatedas

discontinuedoperationsandtheentitymakesthedisclosuresrequiredby

Examp e

p y q y

paragraphs33and34oftheSLFRS.

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Discontinued operations definition


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Componentofanentitythatbythebalancesheetdate:

hasbeendisposedof,OR

meetsheldforsalecriteria

AND

representsaseparatemajorlineofbusinessorgeographicalareaofoperation

isapartofasinglecoordinatedplantodisposeofaseparatemajorlineof

b i ORbus ness

OR

isasubsidiaryacquiredwithaviewtoresell

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Discontinued operations - presentation


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Asingleamountinthestatementofcomprehensiveincomecomprising

posttaxprofit/lossofoperationandprofit/lossonmeasurementtofair

valuelesscoststosell(orondisposal)

Furtheranalysisonfaceorinnotes

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Presentation and Disclosure


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IllustrativeExample

Microsoft Office

Word Document

PresentationandDisclosure

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Key points


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Disposa group can e he or sa e an not be a discon nued opera on

Balance sheet position for assets and disposal groups classified as held for

sale not restated in comparative period

Statement of Comprehensive Income results of discontinued operations

are restated

Abandoned activity at year end may be discontinued but will not be held

for sale

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New DevelopmentsStandard ExistingPara

Reference

Replaced/addedparagraph

SLFRS5 Not

Included

Para5BThis SLFRS specifies the disclosures required in respect of noncurrent

assets (or disposal groups) classified as held for sale or discontinued

operations. Disclosures in other SLFRSs do not apply to such assets (or

disposal groups) unless those SLFRSs require:

(a) specific disclosures in respect of noncurrent assets (or disposal groups)

classified as held for sale or discontinued operations; or

(b) disclosures about measurement of assets and liabilities within a

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disposal group that are not within the scope of the measurementrequirement of SLFRS 5 and such disclosures are not already provided in

the other notes to the financial statements.

Additional disclosures about noncurrent assets (or disposal groups)

classified as held for sale or discontinued operations may be necessary to

comply with the general requirements of LKAS 1, in particular paragraphs

15 and 125 of that Standard

Outline


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THANK YOU

Slfrs5 Non Current Assets Held for Sale and Discontinued Operations

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