Whether IFRS 5 should be applied to non-current assets that are held for distribution to owners
The Board discussed a proposal by the IFRIC for the Board to amend IFRS 5 so that its requirements would be applied to non-current assets held for distribution to owners as well as to assets held for sale.
The IFRIC concluded that, because the carrying amounts of the assets will no longer be recovered principally through use when an entity has an obligation to distribute the assets, the information required by IFRS 5 is important to users of the financial statements regardless of the method of disposal.
The IFRIC recommended that the proposed amendments to IFRS 5 should be included in the draft Interpretation Distributions of Non-cash Assets to Owners so that respondents could comment on all the proposals together.
The Board agreed with the IFRIC�s conclusion that IFRS 5 should be amended. However, the Board noted that IFRS 5 requires an entity to classify a non-current asset as held for sale when the sale is highly probable and the entity is committed to a plan to sell. Consequently, instead of including the proposed amendments to IFRS 5 in the draft Interpretation, the Board directed the staff to include in the Invitation to Comment on the draft Interpretation questions about when an entity should apply the requirements in IFRS 5, ie should an entity apply IFRS 5 when it is committed to make a distribution or when it has an obligation to distribute the assets? If the former, what should be the indicators of commitment?