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Amendments to IFRS 5

IASB meeting summaries


 IASB December 2009


 

 

Possible annual improvements

The Board considered issues relating to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. These matters had been discussed by the Board at its meeting in July 2009, when it had asked the staff to perform further work, including discussing with the FASB staff alignment of IFRS 5 with US GAAP on these issues.

The issues considered by the Board were:

  • how an impairment loss should be recognised when the impairment is greater than the carrying amount of non-current assets in the disposal group.
  • whether to clarify the presentation of other comprehensive income (OCI) relating to discontinued operations in the statement of comprehensive income.
  • whether to require additional disclosures of accumulated other comprehensive income (AOCI) relating to discontinued operations.

Also considered were other concerns noted by constituents subsequent to the July 2009 Board meeting relating to the reversal of impairment losses.

The Board decided not to add a project to its agenda to address the impairment measurement and reversal issues at this time. The Board also noted that any amendments to reflect the presentation and disclosure issues relating to OCI and AOCI should be considered as part of the Board's project on Financial Statement Presentation.

 

Discontinued operations

This session was held jointly with the FASB.

The boards discussed the definition of a discontinued operation and disclosures about discontinued operations and other disposals. The boards made the following tentative decisions.

Definition of a Discontinued Operation

The boards decided that a discontinued operation is a component that has either been disposed, or is classified as held for sale, and

(a) represents a separate major line of business or geographical area of operations,

(b) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or

(c) is a business that meets the criteria to be classified as held for sale on acquisition.

Disclosures

Disposal of a component of an entity that meets the definition of a discontinued operation

An entity would provide the following disclosures about a disposal of a component of an entity that meets the definition of a discontinued operation for current and prior periods:

  • The profit or loss, together with major income and expense items constituting that profit or loss, including impairments, interest, depreciation, and amortisation;
  • The major classes of cash flows (operating, investing, and financing);
  • A reconciliation of the major classes of assets and liabilities classified as held for sale in the notes to the financial statements to total assets and total liabilities classified as held for sale that are presented separately on the face of the statement of financial position income;
  • A reconciliation of the profit or loss for disposals presented in the notes to the financial statements to the after-tax profit or loss from discontinued operations presented in the statement of comprehensive income; and
  • If the component includes a non-controlling interest, the profit or loss attributable to the parent.

Disposal of a component of an entity that does not meet the definition of a discontinued operation

An entity would provide the following disclosures about a disposal of a significant component of an entity that does not meet the definition of a discontinued operation for current and prior periods:

  • The pre-tax profit or loss;
  • A reconciliation of the major classes of assets and liabilities classified as held for sale in the notes to the financial statements to total assets, and total liabilities classified as held for sale that are presented separately in the statement of financial position income;
  • A reconciliation of the profit or loss for disposals presented in the notes to the financial statements to the after-tax profit or loss from discontinued operations presented in the statement of comprehensive income; and
  • If the component includes a non-controlling interest, the pre-tax profit or loss attributable to the parent.

Disposals of long-lived assets that are not components of an entity

If major classes of assets and liabilities included as part of the disposal group are not presented separately in the statement of financial position, the entity would disclose those classes of assets and liabilities in the notes to the financial statements. Additionally the entity would reconcile the amounts provided in the notes to the financial statements to total assets and total liabilities classified as held for sale that are presented separately in the statement of financial position, respectively.

Continuing involvement and continuing cash flows

If an entity retains continuing involvement with the discontinued operation and/or continuing cash flows between the discontinued operation and the remaining entity after the disposal date, the entity would provide the following disclosures:

  • The nature of the activities that give rise to continuing involvement and/or cash flows;
  • The period of time for which the continuing involvement and/or cash flows is expected to continue;
  • The amount of the continuing cash flows, if applicable; and
  • The amounts presented in continuing operations after the disposal transaction that prior to the disposal transaction were eliminated in consolidated financial statements as intra-entity transactions.

Re-exposure and comment period

The boards decided that the proposed guidance would be re-exposed. The boards directed the staff to proceed to the draft of the Exposure Draft for vote by written ballot. The length of the comment period for the Exposure Draft would be discussed at a future meeting.

 

Date: 12/17/2009