IFRS 5

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IFRS 5 refers to the International Financial Reporting Standards relating to Non-current assets held for sale and discontinued operations.

[edit] Non-current assets held for sale

If non-current assets is "held for sale", the economic benefit of the asset is obtained through sale rather than continuous use in the business(future economic benifit). Such asset ceased to be depreciated as it is no longer being consumed by the business. Moreover, asset held for sale is valued at the lower of

the carrying cost and
fair value less costs to sell.

Held for sale non current asset should be presented separately on the face of the balance sheet as current asset.

For a non current asset (Fixed Asset) to be classifed as 'held for sale', all the following 4 conditions must be satisfied.

The asset must be available for immediate sale in its present condition and location.
The sale is exptected to be completed within 12 months of classification as 'held for sale'.
No expectation that the plan for sale will be withdrawn or changed significantly
The sale must be highly probable, signified by

- The management's commitment for the plan

- Existence of active marketing of the asset.

[edit] Discontinued operations

A discontinued operation is a component of an enterprise that either has been disposed of, or is classified as held for sale, and

represnts a separate major line of business or geographical area of operations
is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or
is a subsidary acquired exclusively with a view to resale.