This session was intended to discuss sweep issues arising from Board members' review of the pre-ballot draft of proposed amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations and the discussions at the FASB meeting at 14 May 2008 on potential changes to SFAS 144 Accounting for the Impairment or Disposal of Long-Lived Assets. The goal of this project is to amplify the definition of a discontinued operation in IFRS 5.

Two issues were discussed at this meeting:

• Issue 1: Subsidiaries that meet the criteria to be classified as held for sale on acquisition
  • Presentation on the statement of comprehensive income
  • Disclosure exemptions.
• Issue 2: Disclosures for all components of an entity that either have been disposed of or are classified as held for sale
  • Unit of disclosure
  • Use of proceeds from disposal activities.

Subsidiaries that meet the criteria to be classified as held for sale on acquisition

Presentation on the statement of comprehensive income

Regarding the first part of issue 1, the staff asked the Board if it would agree to a change in the definition of a discontinued operation. The staff informed the Board that the FASB intended to include bundles of asset in that definition. This would result in removing the floor of an operating segment as defined by IFRS 8 if it is not a subsidiary. The Board discussed the pros and cons of extending the definition proposed by the FASB. While there seemed to be some consensus for the idea, once the staff clarified that FASB plans to take this approach to scenarios outside a business combination, but to acquisitions in a broader context, the Chairman proposed that this is not a sweep issue anymore as these are new facts the Board would have to vote on. The staff was asked to bring this particular issue back at a later point.

Disclosure exemptions

The staff asked the Board if discontinued operations should still be provided with exemptions for both the discontinued operations and business combinations disclosure requirements.

The Board agreed to provide these disclosure exemptions provided it could agree on the first part of issue 1.

Disclosures for all components of an entity that either have been disposed of or are classified as held for sale

Unit of disclosure

The proposed amendments would require providing certain disclosures for all components of an entity that either have been disposed of or are classified as held for sale. The staff noted that these requirements were silent on the issue of aggregation. The Board was asked if it would explicitly require disclosure for every single component meeting the criteria or remain silent on the issue and let entities and their auditors decide on the appropriate level of aggregation. The staff recommended the latter. One Board member noted that it would be a very burdensome requirement for prepares if aggregation would be prohibited and every item would have to be reported on separately.

The Board agreed.

Use of proceeds from disposal activities

The last issue discussed at this session was the question still to require a disclosure related to the intended use for the proceeds from the disposal activities, mainly for reasons of providing forward-looking statements when requiring such a disclosure and that entities often cannot specify the intended use at the reporting date. The staff proposed to delete this specific disclosure requirement.

The Board agreed.