IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations

1. Introduction and Objective

International Financial Reporting Standards (IFRS) are accounting technical standards adopted by the IASB that constitute the globally accepted manual. The NIIF 5 describes how to account for non‑current assets held for sale (or distribution), which are not depreciated, are measured at the lower of their carrying amount and fair value less costs to sell, and are presented separately.

Main objective: Specify the accounting treatment and presentation of discontinued operations requiring that:

• Qualified assets are measured at the lower of their book value and fair value less costs of sale, ceasing their depreciation.
• They are presented separately in the statement of financial position and the results of discontinued operations in comprehensive income.

2. Scope and Classification Rules

• What does it apply to? To the classification, presentation and measurement of all recognized non‑current assets and disposal groups (including assets or groups to be distributed to owners).
• Classification rules: Non‑current assets are not reclassified as current until they meet the criteria of IFRS 5. If they are part of a disposal group, the measurement requirements apply to the group as a whole.

3. Measurement Exceptions

The following assets are measured under their respective standards, even if they are part of a disposal group:

• Deferred tax assets (IAS 12) and employee benefits (IAS 19).
• Financial assets (IFRS 9).
• Investment properties under the fair value model (IAS 40).
• Agricultural assets measured at fair value less costs to sell (IAS 41).
• Groups of insurance contracts (IFRS 17).