: Asset Disposals and Discontinued Operations (ED 4)

Definition of Discontinued Operations

The staff noted that the majority of commentators disagreed with the proposed definition and were concerned as to relatively small units being classified as discontinued and discontinuing operations being presented every year.

The staff proposed that the current definition in IAS 35 be used but that the timing of the classification be retained as being consistent with the timing of the classification of assets as held for sale.

After considerable discussion the Board considered whether to delay any amendments until the FASB or EITF has completed deliberations on any amendments. This was not accepted (9-5).

The Board then agreed to adopt the staff recommendation but to continue working on the definition of a discontinued operation with a view to converging in a subsequent amendment.

Current/Non-current Classification of Assets (and Disposal Groups) Held for Sale

To address certain commentators' concerns the staff recommended that, for the purposes of this standard only, the definition of non-current assets should be modified, as follows:

• for entities that use a current/non-current balance sheet presentation: assets that, until their final year of use, the entity would classify as non-current in the absence of a specific decision to sell; and
• for entities that use a liquidity presentation: assets that, until their last year of use, would, in the absence of a specific decision to sell, include amounts expected to be recovered more than twelve months after the balance sheet date.

The Board did not support the staff's proposal but requested that the staff provide further clarification that non-current assets would only be classified as current if they meet the held-for-sale classification.

The Board noted that they did not believe that non-current assets in their final year of use or the next years depreciation should be classified as current under the realised within 12 months or consumed within the operating cycle.

Associates and Joint Ventures

The staff noted the decision in January that assets should only be excluded from the scope of the measurement provisions if:

• they are already marked to market; or
• there would be difficulties in determining their fair value less costs to sell.

It was further noted that this would not apply to investments in associates and joint ventures in consolidated financial statements (except for those acquired and held exclusively for resale, which are accounted for under IAS 39).

The staff, therefore, recommended:

• that investments in associates and joint ventures in consolidated financial statements should continue to be included in the scope of the IFRS;
• the requirements relating to associates and joint ventures acquired and held exclusively for resale should be deleted from IASs 28 and 31; and
• requirements for associates and joint ventures that meet the criteria to be classified as held for sale to be treated in accordance with the standard should be added to IASs 28 and 31.

The Board agreed but requested the staff to add examples clarifying that the underlying assets and liabilities would be valued in accordance with this standard.