This free, guided checker walks your finance team through the key decision points for IFRS 5 Held for Sale and Discontinued Operations. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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The classification focuses on the method of recovery, not merely management's intention to sell eventually. Compare the disposal plan with how cash will actually be generated: an asset still deployed in operations with no active sale process is recovered through use. A common misapplication is classifying assets as held for sale on a board resolution alone, before any of the IFRS 5.7-5.8 conditions exist.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IFRS issued standards
IFRS 5 permits discontinued-operation presentation when a geographically distinct component is disposed of by closure or liquidation even if held-for-sale criteria are not met.
Continue the existing measurement basis under the applicable standards and monitor the disposal plan; neither IFRS 5.6-5.8 nor IFRS 5.13 applies yet.
Official guidance: IFRS issued standards
Test whether the entity has the present intention and ability to transfer the asset to a buyer in its current condition (IFRS 5.7). Remaining actions should be usual and customary for such sales - for example a standard title transfer - not substantive completion work such as vacating a facility, finishing development, or carving out shared functions. The common trap is treating a signed plan as availability while the asset is still needed to fill existing orders.
Do not classify as held for sale until the asset is available for immediate sale.
Official guidance: IFRS issued standards
Require an appropriate management commitment, active marketing at a reasonable price, buyer interest, and actions indicating withdrawal is unlikely.
Do not classify as held for sale until the highly probable threshold in IFRS 5.8 is met; continue depreciation and existing measurement in the meantime.
Official guidance: IFRS issued standards
Apply other standards immediately before IFRS 5 measurement, cease depreciation for scoped assets, and allocate any impairment loss within the disposal group under IFRS 5 sequence rules.
Complete the fair value less costs to sell measurement and IFRS 5.23 impairment allocation before held-for-sale presentation (IFRS 5.15).
Official guidance: IFRS issued standards
A wholesale banking branch generating a majority of revenue and profit can represent a major geographical area even when residual assets transfer to head office after wind-down.
Apply held-for-sale measurement (IFRS 5.15) and separate balance-sheet presentation (IFRS 5.38) without discontinued-operation classification.
Official guidance: IFRS issued standards
IFRS 5.31 requires a component whose operations and cash flows can be clearly distinguished operationally and for financial reporting, such as a separately licensed branch wind-down.
Reassess and document component boundaries against the IFRS 5.31 definition before discontinued-operation presentation.
Official guidance: IFRS issued standards
Re-present prior-period income statement and cash-flow information so the discontinued component is shown separately in every period presented (IFRS 5.34). Disclose the single post-tax amount and its analysis of revenue, expenses, pre-tax profit or loss, and income tax (IFRS 5.33(a)-(b)), plus net cash flows by activity (IFRS 5.33(c)). A frequent gap is restating the income statement but leaving comparative cash-flow information unsplit.
Present the component as a discontinued operation with the single post-tax amount, its analysis, and re-presented comparatives (IFRS 5.33-5.34). Prepare the comparative restatement bridge required by IFRS 5.34 before issuing discontinued-operation presentation.
Official guidance: IFRS issued standards
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