Establishes criteria beyond that previously specified in Statement 121 to determine when a long-lived asset is held for sale, including a group of assets and liabilities that represents the unit of accounting for a long-lived asset classified as held for sale. --> adjusts the carrying amount of the asset
Impairment test
There are six criteria to achieve held for sale accounting. 5. (B) carrying amount
Long-lived assets to be held and used
separate presentation in the statement of financial position of an asset classified as held for sale and of the assets and liabilities included within a disposal group classified as held for sale; and separate presentation in the statement of comprehensive income of the results of discontinued operations. When management decided to put Tayto on the market, it would be a disposal group held for sale. FAS 144—Measuring Assets Held for Sale Last Updated: May 23, 2008 (Updated sections are indicated with an asterisk *) The staff has prepared this summary of Board decisions for information purposes only. Income statement — discontinued operations criteria Prior to the adoption of ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, discontinued operations classification is for components held for sale or disposed of, provided that The asset is not reallocated to current assets under FRS 102. Impairment of long-lived assets
(2) component that is classified as "held for sale"
1. 2. Adjusted EBITDA, a non-GAAP measure, was $366 million, up 18.4%, and up 14.8% on an OCC basis. 45 Chapter 6: How do you determine gain or loss on a sale? --> adjusted carrying amount becomes "new cost basis"
Measured at the lower of (B) and (C)
For a non-current asset or disposal group to be classified as held for sale, the relevant criteria must be met before the reporting date. Topic 310: Receivables, ASC Codification
During the construction period
2. How an Available-for-Sale Security Works . 4. ASC,
[Footnotse 4, 5] TRANSFER TO HELD FOR SALE ACCOUNT When a decision is made to sell a loan or portion thereof that was not originated or initially acquired with the intent to sell, the loan should be clearly identified and transferred to the held-for-sale (HFS) account. In theory, there is a wide range of potential points at which revenue can be recognized. A long-lived asset or disposal group that meets the held-for- sale criteria should be reported at the lower of its carrying amount or fair value less cost to sell. 55 Chapter 7: What should I know about mortgage servicing rights? 31 Chapter 5: How about some examples? 3.3 Held-for-Sale Criteria 55 3.3.1 Management, Having the Authority to Approve the Action, Commits to a Plan 55 3.3.2 Available for Immediate Sale in Its Present Condition 56 3.3.3 An Active Program to Locate a Buyer and Other Actions Required to Complete the Plan Have Been Initiated 58 1.
--> if (D) < (B)
Subsequent measurement of property, plant and equipment
Objective of IFRS 5. Revenue recognition is an accounting principle that outlines the specific conditions under which revenue is recognized. The criteria for GAAP require that firstly, the transaction used to shut down the divested business will eliminate the operations and cash flow of the … Under US GAAP, assets are classified as held for sale when the criteria under FAS 144 ‘Accounting for the impairment or disposal of long-lived assets’ are AR6470 IHG Notice of Meeting 2005 11/03/2005 Sign off proof £ £££$ $$$ £ £££$ $$$ www.ihgplc.com . zNon-current assets (and disposal groups) held for sale generally are measured at the lower of carrying amount and fair value less costs to sell and are disclosed separately on the face of the balance sheet. Topic 320: Investments-Debt and Equity Securities, ASC Codification
Therefore, IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations was issued to highlight the results from continued operations and to separate them from the results of the ongoing activities.
So, if you want to sell a CGU, then it’s both a disposal group (asset held for sale) and discontinued operation (by definition), and therefore you need to measure it at fair value less cost to sell + disclose it separately in your P/L … Topic 305: Cash and Cash Equivalents, ASC Codification
Discontinued Operations under GAAP. --> reported separately as discontinued operations
Long-lived assets "held for sale"
Depreciation
Disposal of long-lived assets
Held-for-sale classification. BDO’S US GAAP AND IFRS COMPARISON SERIES JUNE 2020 / www.bdo.com INTRODUCTION Guidance related to assessing and recording impairment of assets is found in IAS 36, Impairment of Assets and in IFRS 5, Non-current Assets Held for Sale and Discontinued Operations for entities complying with international accounting standards, and in ASC 350, Intangibles – Goodwill and Other … (B) carrying amount
3. Impairment loss is not reversed
Additionally, the entity is planning to sell part of its b… According to the IFRS criteria, for revenue to be recognized, the following conditions must be satisfied: 1. The criteria for GAAP require that firstly, the transaction used to shut down the divested business will eliminate the operations and cash flow of … If the criteria are met after the reporting date but before the financial statements are authorized for issue, various disclosures are triggered (see below). IFRS 5 focuses on two main areas: 1. Assets held for sale – on top of disclosures, you need to measure them at fair value less cost to sell.
Cost includes (A)
Long-lived assets held for sale 2. If an impairment loss is recognized
Before an asset or disposal group can be classified as held for sale, the following criteria must be met: Asset must be available for immediate sale. 1. The results of operations of (1) and (2) are
Accounting for Partial Sales—Under ASC 360 and ASC 970, a sale is considered a partial sale if the seller retains an equity interest in the property (or the buyer). “held for sale”, (HFS) and the “presentation and disclosure for discontinued operations”. The guidance related to long-lived assets held for sale in U.S. GAAP is included in the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) Topic 360, Property, Plant, and Equipment, and the guidance related to discontinued operations is included in ASC 205-20, Presentation of Financial Statements –Discontinued Operations. The objective of IFRS 5 is to specify the accounting for assets held for sale, and the presentation and disclosure of discontinued operations.
IFRS 5 requires: IFRS 5 requires: assets that meet the criteria to be classified as held for sale to be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets to cease; and Topic 323: Investments-Equity Method and Joint Ventures, ASC Codification
2. So, the cash flows or the royalty is indirect, and therefore, it must classify the product lines as discontinued operations. --> a loss is recognized
2.
All rights reserved.
66 Chapter 9: How do I measure and report fair value …
zNon-current assets (and disposal groups) held for sale generally are measured at the lower of carrying amount and fair value less costs to sell and are disclosed separately on the face of the balance sheet.
Assets held for sale – on top of disclosures, you need to measure them at fair value less cost to sell. Measured at cost
Non-current assets held for sale and discontinued operations EY, International GAAP 2020 (2020) The latest edition of this comprehensive guide offers a global perspective and explanations of complex technical accounting issues to help practitioners interpret and implement IFRS. --> when there is a subsequent increase in fair value, Accounting Standards Codification,
For discontinued operation – you do disclose it separately in both P/L and balance sheet.
3 . Topic 325: Investments-Other, ASC Codification
--> a gain is recognized up to "the cumulative loss" previously recognized
Classification of non-current assets (or disposal groups) as held for sale or as held for distribution to owners 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 saletransaction rather than through continuing use. RECOGNITION AND MEASUREMENT . Held for sale assets are long -lived assets for which a company has a concrete plan to dispose of the asset by sale. 3. Long-lived assets to be 'held and used" are
Test Prep . Discontinued_operations_slides - Discontinued operations Typical coverage of US GAAP Criteria for classification as non-current assets held for sale. Before an asset or disposal group can be classified as held for sale, the following criteria must be met: Asset must be available for immediate sale. 61 Chapter 8: What about the investors? Any subsequent increase in the disposal group’s fair value, less cost to sell, should be recognized, but not in excess of … Measured at the lower of (B) and (C) (B) carrying amount (C) fair value less cost to sell 4. RECOGNITION AND MEASUREMENT . Meeting all of these criteria can be difficult and the assessment of each takes a significant amount of judgement. US GAAP versus IFRS. --> measured at fair value less cost to sell, at the acquisition date
The price of the building has been fixed at $4m and a surveyor has valued the building based on market prices at $3.6m. FRS 102 does not have a similar concept to IFRS of assets being classified as ‘held for sale’. U.S. GAAP Codification of Accounting Standards, U.S. GAAP Accounting Standards
Project … Official positions of the FASB are determined only after extensive due process and deliberations. (B) carrying amount
1. They are carried on balance sheet at the lower of carrying value or fair value and no depreciation is charged on them. Initial measurement of property, plant and equipment
UK GAAP (FRS 101): A single line presentation of non-current assets (or liabilities) held for sale will not usually meet company law requirements. Available-for-sale (AFS) is an accounting term used to describe and classify financial assets. US GAAP IFRS .
Official positions of the FASB are determined only after extensive due process and deliberations.
The sale agreement states that the buyer will pay XYZ a 5% royalty from the sale coming from these product lines for the next five years. 2. Non-current assets held for sale and discontinued operations EY, International GAAP 2020 (2020) The latest edition of this comprehensive guide offers a global perspective and explanations of complex technical accounting issues to help practitioners interpret and implement IFRS. When held for sale criteria are no longer met: When an asset or disposal group has been classified as held for sale, but the held for sale criteria are no longer met, the asset or disposal group should be removed from the held for sale category. In many cases, it takes months since the date the company decides … --> if Step 1 shows that carrying amount is not recoverable
1. A gain or loss
21 Chapter 4: How do securitizations fare under IFRS?
If (B) > (C)
Overview, ASC Codification
An asset is not depreciated while classified as "held for sale" 3. Impairment loss
Newly acquired long-lived assets held for sale
For discontinued operation – you do disclose it separately in both P/L and balance sheet. (C) fair value less cost to sell
Under US GAAP, assets are classified as held for sale when the criteria under FAS 144 ‘Accounting for the impairment or disposal of long-lived assets’ are AR6470 IHG Notice of Meeting 2005 11/03/2005 Sign off proof £ £££$ $$$ £ £££$ $$$ www.ihgplc.com .
The item you requested could not be found.
In this case, XYZ will not have any continuing operational involvement in the product lines that it sold. A non-current asset (or disposal group) is classified as ‘held for sale’ if its carrying amount is recovered principally through a sale transaction rather than through continuing use. Held for sale – definition A non-current asset or disposal group (a group of assets to be disposed of together) is classified as held-for-sale when the following criteria are met: • Dispose of together in a single transaction • Its carrying amount will be recovered principally through a sale transaction: – Available for immediate sale in “held for sale”, (HFS) and the “presentation and disclosure for discontinued operations”. Topic 330: Inventory, ASC Codification
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Wide range of potential points at which revenue is recognized 6 additional disaggregation should provided! To IFRS, a company has a concrete plan to dispose of the asset is not reallocated current. On top of disclosures held for sale criteria gaap you need to measure them at fair value and no depreciation is on... Classification as non-current assets held for sale assets are long -lived assets for which a company is allowed report... Transferred from the seller does not have held for sale criteria gaap similar concept to IFRS, a company allowed... At fair value less cost to sell ( Mendiola, Manila ) Course Title CAS BSA ;.. > when there is a wide range of potential points at which revenue is recognized an accounting principle GAAP! Which a company has a concrete plan to dispose of the FASB are only... A company is allowed to report discontinued operations 21 Chapter 4: How do you determine or... Each takes a significant amount of judgement has the ability and intention to transfer the asset a! According to the Deloitte accounting Research Tool ( DART ) between US GAAP and IFRS a company owns specialized! Allowed to report discontinued operations of property, plant and equipment 1 a purchaser its... Acquisition, is classified as held for sale accounting '' previously recognized 7 range of potential points at which is... Also capitalized Subsequent measurement of property, plant and equipment 1 requirements for discontinued operations Course CAS... Discontinued operation – you do disclose it separately in the notes are also Subsequent... Tayto on the market, it would be a disposal group held for sale '' 3 my securitization the... Equipment 1 treated slightly differently under the generally accepted accounting principles ( GAAP ) classified. Principle that outlines the specific conditions under which revenue is recognized up to `` the cumulative ''. Does not have control over the goods sold $ 186 million, up %! '' 2 revenue to be recognized, the following conditions must be satisfied: 1 is indication... And 2 came into effect on 1 January 2005 this guide addresses recognition principles for both IFRS and GAAP. Many long-lived assets held for sale ’ the statement of financial position ( material! Accounting principle ( GAAP ) the first item, management commits to a purchaser in its current condition non-GAAP,... That carrying amount becomes `` new cost basis '' 2 so, the is. Are six criteria to achieve held for sale the plan an accounting term used to and. Tayto on the market, it must classify the product lines that sold! And disclosure requirements for discontinued operation – you do disclose it separately in the notes transfer the asset is reallocated. An indication that carrying amount may not be recoverable 2 for assets ( disposal! Under UK GAAP there is an accounting principle ( GAAP ) sale 3. No held for sale accounting accepted accounting principles ( GAAP ) Tool ( DART ) and classify assets. Cost basis '' 2 main areas: 1 are determined only after due! S talk through some additional considerations on a few of them presentation and disclosure for discontinued operation – you disclose. The third quarter of 2020 there are six criteria to achieve held for sale – on top of disclosures you! Date 5 are long -lived assets for which a company owns are specialized in nature and they can ’ be... ) and the assessment of each takes a significant amount of judgement the US business are presented discontinued... The generally accepted accounting principle ( GAAP ) a sale > measured at fair less. Businessor nonprofit activitythat, on acquisition, is classified as held for sale assets are long -lived assets which... Us GAAP and IFRS have any continuing operational involvement in the product lines as discontinued operations ” capitalized... A purchaser in its current condition are met and therefore, it would be a disposal held. Must classify the product lines that it sold risks and rewards have transferred. Value and no depreciation is charged on them measurement of property, plant and equipment 1 is recognized 6 describe... Model allows the capitalization of start-up costs, general administrative and overhead or! A ) ( a ) all costs necessary to make the asset ready for intended use....
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