IFRS 5 — Non-current assets held for sale and discontinued operations

Date recorded:

In its September 2015 meeting, the Committee published three tentative decisions relating to IFRS 5-related issues. These are:

  1. To what extent an impairment loss can be allocated to non-current assets within a disposal group;
  2. The presentation of intragroup transactions between continuing and discontinued operations; and
  3. Various other IFRS 5 issues

A number of comments were received from respondents on the proposed agenda decisions.

Issue 1 (see Agenda Paper 7A)


The issue relates to the allocation of impairment losses to assets within a disposal group to the extent that they reduce the carrying amounts of assets below fair value less costs to sell. The Committee decided not to add the issue to its agenda as it thought that sufficient guidance was already provided in IFRS 5 and IAS 36.

Comment letter analysis

Two (of the three) respondents agreed with the conclusion in the tentative agenda decision, but suggested that it should discuss the unit of account. The other respondent did not think that sufficient guidance was available.

Originally, staff had included a discussion relating to the unit of account in the tentative agenda decision, but the Committee decided that this should be removed as it would not affect the ultimate conclusion and consensus on its inclusion could not be reached.

Furthermore, two respondents questioned whether this issue should be addressed separately from the other issues addressed as Issue 3.

Staff recommendation

Staff recommend that the agenda decision be finalised subject to minor editorial changes.

Committee discussion and decision

The vast majority agreed with the staff recommendation.


Issue 2 (see Agenda Paper 7B)


Similarly to Issue 1, the Committee decided not to add this issue to its agenda as it considered that sufficient guidance already exists within IFRS 5 and IFRS 10. However, diversity in practice exists relating to the presentation of intragroup transactions between continuing and discontinued operations.  Three primary views exit:

  • View 1 — eliminate intragroup transactions without any adjustments;
  • View 2 — eliminate intragroup transactions, but make adjustments to illustrate the impact on continuing operations going forward; and
  • View 3 — do not eliminate intragroup transactions.

The Committee’s tentative conclusion was consistent with View 1.

Comment letter analysis

A few respondents were concerned that the tentative decision was worded in a way that would not permit presentation other than in accordance with View 1 and, in effect, created a presentation rule. Furthermore, many respondents felt that the wording of the existing tentative agenda decision would lead to presentation not consistent with the objective of IFRS 5.

Staff recommendation

The staff recommends that the agenda decision not be finalised. Instead the issue should be transferred to the agenda decision relating to other issues (see Issue 3).

Committee discussion and decision

The discussion centred on whether the issue should be left to the IASB to consider or whether the Committee could provide some assistance relating to the issue raised immediately.

Ultimately, a decision was taken, supported by a majority, to issue an agenda decision that would remove View 3 as an alternative but to pass the issue of whether View 1 or View 2 was the correct approach to the IASB. In other words, this would be considered as part of the other issues discussed in Issue 3 below.


Issue 3 (see Agenda Paper 7C)


As a result of many issues being raised relating to the implementation of IFRS 5, the Committee decided to take these issues to the IASB.  The IASB decided to divide these issues into those to be considered in the short-term and those to be discussed in the medium to long-term.

The Committee decided to publish a tentative agenda decision relating to the medium to long-term issues, acknowledging that these would not be discussed by the Committee in the short-term unless a request was received by the IASB to do so.

Comment letter analysis

Respondents agreed that these issues should not be discussed in the short-term but believe that the number of unresolved issues indicates a need for standard-setting activity.  In addition, respondents believe that Issue 2 (above) should be incorporated into this agenda decision.

Staff recommendation

Staff recommend that the agenda decision be finalised subject to some changes to the wording and including the issue raised in Issue 2.

Committee discussion and decision

Staff informed the Committee that another response had been received after the Agenda Papers had been posted.  This response was from ESMA and they recommended that the IASB undertake a comprehensive review of IFRS 5.

All members agreed with the staff recommendation (subject to changes being made based on the discussion of Issue 2 above).  However, a few members sought assurance that should the issues be transferred to the IASB and not addressed by them that the issues could be brought back to the Committee for consideration in the future.

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