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Classification
of non-current assets (or disposal groups) as held for sale
6. An entity
shall classify a non-current asset (or disposal group) as
held for sale if its carrying amount will be
recovered principally through a sale transaction rather than
through continuing use.
7. For this to be
the case, the asset (or disposal group) must be available
for immediate sale in its present condition subject
only to terms that are usual and customary for sales of such
assets (or disposal groups) and its sale must be highly
probable.
8. For the sale to
be highly probable, the appropriate level of management must
be committed to a plan to sell the asset
(or disposal group), and an active programme to locate a
buyer and complete the plan must have been initiated.
Further,
the asset (or disposal group) must be actively marketed for
sale at a price that is reasonable in relation to its
current
fair value. In addition, the sale should be expected to
qualify for recognition as a completed sale within one year
from the date of classification, except as permitted by
paragraph 9, and actions required to complete the plan
should
indicate that it is unlikely that significant changes to the
plan will be made or that the plan will be withdrawn.
9. Events or
circumstances may extend the period to complete the sale
beyond one year. An extension of the period
required to complete a sale does not preclude an asset (or
disposal group) from being classified as held for sale if
the
delay is caused by events or circumstances beyond the
entity’s control and there is sufficient evidence that the
entity
remains committed to its plan to sell the asset (or disposal
group). This will be the case when the criteria in Appendix
B are met.
10. Sale
transactions include exchanges of non-current assets for
other noncurrent assets when the exchange has commercial
substance in accordance with IAS 16 Property, Plant and
Equipment.
11. When an entity
acquires a non-current asset (or disposal group) exclusively
with a view to its subsequent disposal, it
shall classify the non-current asset (or disposal group) as
held for sale at the acquisition date only if the oneyear
requirement
in paragraph 8 is met (except as permitted by paragraph 9)
and it is highly probable that any other criteria in
paragraphs 7 and 8 that are not met at that date will be met
within a short period following the acquisition (usually
within three months).
12. If the
criteria in paragraphs 7 and 8 are met after the balance
sheet date, an entity shall not classify a non-current asset
(or disposal group) as held for sale in those financial
statements when issued. However, when those criteria are met
after the balance sheet date but before the authorisation of
the financial statements for issue, the entity shall
disclose
the information specified in paragraph 41(a), (b) and (d) in
the notes.
Non-current
assets that are to be abandoned
13. An entity
shall not classify as held for sale a non-current asset (or
disposal group) that is to be abandoned. This is
because its carrying amount will be recovered principally
through continuing use. However, if the disposal group to be
abandoned meets the criteria in paragraph 32(a)-(c), the
entity shall present the results and cash flows of the
disposal
group as discontinued operations in accordance with
paragraphs 33 and 34 at the date on which it ceases to be
used. Non-current assets (or disposal groups) to be
abandoned include non-current assets (or disposal groups)
that are
to be used to the end of their economic life and non-current
assets (or disposal groups) that are to be closed rather
than
sold.
14. An entity
shall not account for a non-current asset that has been
temporarily taken out of use as if it had been
abandoned.
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