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The Interpretations Committee continued to discuss the issues

 24 March 2015


IFRS 5 Non-current Assets Held for Sale and Discontinued Operations—Issues relating to the requirements for scope and presentation in IFRS 5 (Agenda Papers 9, 9A and 9B)

At its November 2014 meeting, the Interpretations Committee considered questions relating to the scope of IFRS 5. The Interpretations Committee asked the staff to analyse the broader question of whether ‘loss of control’ is key to the inclusion of an event within the scope of IFRS 5 or whether there also needs to be a disposal in order for the event to be classified as held for sale. It thought that it should consider this question along with the other new issues relating to IFRS 5 that it had received before deciding how to proceed. At this meeting, the Interpretations Committee discussed the following issues.

  1. Issue 1A: is loss of control key to the inclusion of an event within the scope of IFRS 5 or does there also need to be a disposal in order for the event to be classified as held for sale?
  2. Issue 1B: is IFRS 5 applicable to a disposal group consisting mainly, or entirely, of financial instruments?
  3. Issue 2: how to apply the notion of a ‘major line of business’ in presenting discontinued operations

With regard to Issue 1A, the Interpretations Committee noted that it is important for the Interpretations Committee to better understand the objective for the scope of IFRS 5 so that it can then decide whether the issue can be addressed through an Interpretation, or whether a broader amendment to IFRS 5 would be necessary. Consequently, the Interpretations Committee asked the staff to undertake a broader analysis of the scope of IFRS 5.

With regard to Issue 1B, the Interpretations Committee noted that a disposal group mainly, or entirely, consisting of financial instruments would meet the classification requirements for held for sale that are set out in IFRS 5. However, the Interpretations Committee noted that the question about the measurement of such a disposal group is another example of the IFRS 5 measurement challenges that it had considered in the September 2014 meeting. These related to the recognition of impairment loss for a disposal group. Consequently, the Interpretations Committee noted that this issue could be considered as part of those issues that it had considered in the September 2014 meeting (see agenda papers 3A and 3D for the Interpretations Committee meeting in September 2014).

With regard to Issue 2, the Interpretations Committee noted that this issue is about how to interpret the definition of ‘discontinued operation’ in terms of the concept of ‘operating segment’ in IFRS 8 Operating Segments. The Interpretations Committee noted that the definition of discontinued operations is an area that the IASB had attempted to revise in the former Financial Statement Presentation project, but had not resolved the issues related to this. Consequently, the Interpretations Committee noted that this issue could be considered along with the disclosure and presentation issues that it had considered in the September 2014 meeting (see agenda paper 3B for the Interpretations Committee meeting in September 2014).

The staff will bring a summary of the issues previously discussed but not resolved, including Issues 1B and 2, to a future meeting with a proposal on how to proceed with these outstanding items.

 

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