1. Criteria for “Held for Sale” Classification
A non-current asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. The following conditions must be met:
- The asset must be available for immediate sale in its present condition.
- The sale must be highly probable (management committed to a plan, active program to locate a buyer initiated, asset actively marketed at a reasonable price, and sale expected to complete within one year).
2. Measurement and Presentation Requirements
- Measurement: Once classified as held for sale, depreciation on the asset ceases. The asset is measured at the lower of its carrying amount and fair value less costs to sell. Any resulting write-down is recognized immediately as an impairment loss in profit or loss.
- Discontinued Operations Presentation: A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale, and represents a separate major line of business or geographical area of operations.
- On the face of the income statement, the post-tax profit or loss from discontinued operations, along with the post-tax gain or loss recognized on the measurement/disposal of the assets, must be reported as a single, combined line item below continuing operations.
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