An asset is impaired when (E) < (B) Revenue recognition is an accounting principle that outlines the specific conditions under which revenue is recognized. This is the case where the asset (or disposal group) is available for immediate sale in its present condition, its sale is highly probable, and the sale is expected to be completed within one year from the date of classification. At the time the decision is made, a formal marketing strategy or 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 … Codification Topic 360: Topic 330: Inventory, ASC Codification zAssets classified as held for sale are not amortised or depreciated. 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. Old UK GAAP and new UK GAAP (FRS 102): Assets held for sale are not covered; the decision to sell an asset is considered an impairment indicator. 1. 2. [FRS 101 para A2.10A]. Measured at the lower of (B) and (C) (B) carrying amount (C) fair value less cost to sell 4. 3. 2. Long-lived assets held for sale Criteria for classifying as held for sale: For a non-current asset (or disposal group) to be classified as held for sale: the asset 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; a. Criteria to Be Met. Project … Posted by hardi at Tuesday, November 02, 2010. Subsequent measurement of property, plant and equipment When management decided to put Tayto on the market, it would be a disposal group held for sale. 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 … --> adjusts the carrying amount of the asset --> adjusted carrying amount becomes "new cost basis" The entity will continue to use the building until another building has been found with equivalent facilities, and in a suitable location for the office staff, who will not be relocated until the new building has been found. Similarly to IFRS, a company is allowed to report discontinued operations under GAAP when two criteria are met. Additionally, the entity is planning to sell part of its b… 55 Chapter 7: What should I know about mortgage servicing rights? The entity has the ability and intention to transfer the asset to a purchaser in its current condition. If an entity has classified an asset (or disposal group) as held for sale, but the criteria in paragraphs 7-9 are no longer met, the entity shall cease to classify the asset (or disposal group) as held for sale (paragraph 26 of IFRS 5) (Hrd). Topic 323: Investments-Equity Method and Joint Ventures, ASC Codification An asset is not depreciated while classified as "held for sale" 3. ASC, 2. So, the cash flows or the royalty is indirect, and therefore, it must classify the product lines as discontinued operations. If (C) < (B) Project … It specifies the accounting treatment for assets (or disposal groups) held for sale, and 2. Impairment and disposal of long-lived assets 31 Chapter 5: How about some examples? The objective of IFRS 5 is to specify the accounting for assets held for sale, and the presentation and disclosure of discontinued operations. --> measured at fair value less cost to sell, at the acquisition date Initial measurement of property, plant and equipment The Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration ("the agencies") have jointly issued the attached "Interagency Guidance on Certain Loans Held for Sale." Both accounting models have similar recognition criteria, requiring that costs be included in the cost of the asset if future economic benefits are probable and can be reliably measured. 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). The seller does not have control over the goods sold. (D) sum of "undiscounted" cash flows from the asset If the criteria are met after the reporting date but before the financial statements are authorized for issue, various disclosures are triggered (see below). A business or nonprofit activity that, on acquisition, meets the criteria in paragraph 205-20-45-1E to be classified as held for sale also is a discontinued operation. Available-for-sale (AFS) is an accounting term used to describe and classify financial assets. Criteria to Be Met. ASSETS HELD FOR SALE Under UK GAAP there is no held for sale definition. Chapter 3: Does my securitization meet the sale criteria under GAAP? [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. Carrying amount is not recoverable On the first item, management commits to a plan, there needs to be specificity to the plan. (2) component that is classified as "held for sale" How an Available-for-Sale Security Works . Welcome to the Deloitte Accounting Research Tool (DART). 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. FRS 102 does not have a similar concept to IFRS of assets being classified as ‘held for sale’. Disposal of long-lived assets FASB Accounting Standards Codification Manual, SEC Rules & Regulations (Title 17 — Commodity and Securities Exchanges), Trust Services Principles, Criteria, and Illustrations, Principles and Criteria for XBRL-Formatted Information, Audit and Accounting Guides & Audit Risk Alerts, Other Publications, Press Releases, and Reports, Dbriefs Financial Reporting Presentations, Business Combinations — SEC Reporting Considerations, Consolidation — Identifying a Controlling Financial Interest, Contingencies, Loss Recoveries, and Guarantees, Environmental Obligations and Asset Retirement Obligations, Equity Method Investments and Joint Ventures, Equity Method Investees — SEC Reporting Considerations, Foreign Currency Transactions and Translations, Guarantees and Collateralizations — SEC Reporting Considerations, Impairments and Disposals of Long-Lived Assets and Discontinued Operations, Multiple-Element Arrangements — A Roadmap to Applying the Revenue Recognition Guidance in ASU 2009-13, Qualitative Goodwill Impairment Assessment — A Roadmap to Applying the Guidance in ASU 2011-08, SEC Comment Letter Considerations, Including Industry Insights, Software Revenue Recognition — A Roadmap to Applying ASC 985-605, Transfers and Servicing of Financial Assets, Roadmaps Currently Available Only as a PDF. 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. If (B) > (C) 31 Chapter 5: How about some examples? 61 Chapter 8: What about the investors? Among other things, those criteria specify that (a) the asset must be available for immediate sale in its present condition subject only to terms that are usual and … Many long-lived assets which a company owns are specialized in nature and they can’t be sold over-night. Risks and rewards have been transferred from the seller to the buyer. Step 1: Test for recoverability As stated in ‘Objective’, in particular, the IFRS 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 Measured at the lower of (B) and (C) The basics | 6. 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. For discontinued operation – you do disclose it separately in both P/L and balance sheet. US GAAP IFRS . During the construction period In general, the following conditions must be met for an asset (or 'disposal group') to be classified as held for sale: [IFRS 5.6-8] management is committed to a plan to sell; the asset is available for immediate sale; an active programme to locate a buyer is initiated; the sale is highly probable, within 12 months of classification as held for sale (subject to limited exceptions) 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). Topic 340: Other Assets and Deferred Costs, ASC Codification Topic 350: Intangibles-Goodwill and Other, ASC Codification 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. UK GAAP (FRS 101): A single line presentation of non-current assets (or liabilities) held for sale will not usually meet company law requirements. The results of the US business are presented as discontinued and are shown separately from continuing operations. In particular, the IFRS requires assets that meet the criteria to be classified as held for sale to be: (a) measured at the lower of carrying amount and fair value less … 66 Chapter 9: How do I measure and report fair value … Available for immediate sale in its present condition: A gain or loss Assets held for sale – on top of disclosures, you need to measure them at fair value less cost to sell. All rights reserved. Discontinued_operations_slides - Discontinued operations Typical coverage of US GAAP Criteria for classification as non-current assets held for sale. Impairment loss is not reversed ASSETS HELD FOR SALE Under UK GAAP there is no held for sale definition. US GAAP versus IFRS. they meet the criteria to be classified as held for sale in accordance with the IFRS. 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. The price of the building has been fixed at $4m and a surveyor has valued the building based on market prices at $3.6m. The asset is not reallocated to current assets under FRS 102. Uploaded By President_Internet_Ape12. "Accounting for the Impairment or Disposal of Long-Lived Assets" 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”. 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 … 4. Presented separately in the statement of financial position 2. Long-lived assets "held for sale" Long-lived assets to be held and used Long-lived assets "held for sale" 1. 21 Chapter 4: How do securitizations fare under IFRS? --> certain interest costs are also capitalized Topic 305: Cash and Cash Equivalents, ASC Codification 2. IFRS 5 came into effect on 1 January 2005. 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. 1. (B) carrying amount Meeting all of these criteria can be difficult and the assessment of each takes a significant amount of judgement. IFRS 5 focuses on two main areas: 1. 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 Net income was $186 million, up 466% for the third quarter of 2020. There are six criteria to achieve held for sale accounting. Under US GAAP, assets are classified as held for sale when the criteria under FAS 144 ‘Accounting for the impairment or disposal of long-lived assets’ are AR6470 IHG Notice of Meeting 2005 11/03/2005 Sign off proof £ £££$ $$$ £ £££$ $$$ www.ihgplc.com . The item you requested could not be found. Those Board decisions are tentative and do not change current accounting. Let’s talk through some additional considerations on a few of them. (C) fair value less cost to sell RECOGNITION AND MEASUREMENT . meets the criteria to be classified as held for sale or has been abandoned or spun-off and (b) represents a strategic shift that has (or will A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale or for distribution to owners, and that meets any of the following criteria: 14.8 % on an OCC basis Tuesday, November 02, 2010 an indication that carrying amount not! 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