IFRS 5 refers to the International Financial Reporting Standards

International Financial Reporting Standards

International Financial Reporting Standards are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board ....

 relating to Non-current assets held for sale and discontinued operations.

Non-current assets held for sale

If a non-current asset is 'held for sale', the economic benefit of that asset is obtained through the asset's sale rather than through its continuous use in the business (future economic benefit). Such assets cease to be depreciated as they are no longer being consumed by the business. Moreover, an asset held for sale is valued at the lower of either:

• the asset's carrying cost; or
• the asset's fair value
  Fair value
  Fair value, also called fair price , is a concept used in accounting and economics, defined as a rational and unbiased estimate of the potential market price of a good, service, or asset, taking into account such objective factors as:* acquisition/production/distribution costs, replacement costs,...
  
   less the cost of selling this asset.

Non-current assets 'held for sale' should be presented separately on the face of the Balance sheet

Balance sheet

In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...

 as a current asset

Current asset

In accounting, a current asset is an asset on the balance sheet which can either be converted to cash or used to pay current liabilities within 12 months...

.

For a non-current asset (Fixed Asset) to be classified as 'held for sale', all of the following 4 conditions must be satisfied:

• The asset must be available for immediate sale in its present condition and location; and
• The asset's sale is expected to be completed within 12 months of classification as 'held for sale'; and
• There must be no expectation that the plan for selling the asset will be withdrawn or changed significantly; and
• The successful sale of the asset must be highly probable, signified by both:

- The management's commitment to the asset-selling plan; and

- Existence of active marketing to support the sale of the asset.

The managements decision is also required for that sale proceeds and then the Fair value could be acsertained.

Discontinued operations

A discontinued operation is a component of an enterprise that has either been disposed of, or is classified as 'held for sale', and:

• represents a separate major line of business or geographical area of operations; and
• is part of a single, co-ordinated plan to dispose of this separate major line of business or geographical area of operations; or
• is a subsidiary acquired exclusively with a view to resale.

If there is any gain or loss from sale of assets should be recognised in the statement of comprehensive income.