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FRS 5

LEMBAGA PIAWAIAN PERAKAUNAN MALAYSIAMALAYSIAN ACCOUNTING STANDARDS BOARD

Financial Reporting Standard 5

Non-current Assets Held for Saleand Discontinued Operations

© Malaysian Accounting Standards Board 2005

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Contentsparagraphs

INTRODUCTION IN1-IN6

IASB’s reasons for issuing the IFRS IN1-IN5

Main features of the FRS IN6

Financial Reporting Standard 5Non-current Assets Held for Sale andDiscontinued OperationsOBJECTIVE 1

SCOPE 2-5

CLASSIFICATION OF NON-CURRENT ASSETS(OR DISPOSAL GROUPS) AS HELD FOR SALE 6-14

Non-current assets that are to be abandoned 13-14

MEASUREMENT OF NON-CURRENTASSETS (OR DISPOSAL GROUPS)CLASSIFIED AS HELD FOR SALE 15-29

Measurement of a non-current asset(or disposal group) 15-19

Recognition of impairment losses and reversals 20-25

Changes to a plan of sale 26-29

PRESENTATION AND DISCLOSURE 30-42

Presenting discontinued operations 31-36

Gains or losses relating to continuing operations 37

Presentation of a non-current asset or disposalgroup classified as held for sale 38-40

Additional disclosures 41-42

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TRANSITIONAL PROVISIONS 43

EFFECTIVE DATE 44

WITHDRAWAL OF FRS 1352004 45

APPENDICES

A Defined terms

B Application supplement

Extension of the period required to complete a sale

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Style

Additions to IFRSs are clearly identified and would be made in a manner that preservesthe format and structure of the IFRSs.

If a new paragraph is added, that paragraph would be labelled with the precedingparagraph number followed by a capitalised alphabet and the word “added” isincluded at the right side of the paragraph. If a paragraph is deleted, the text would bemarked as deleted text by the inclusion of the word “deleted” at the right side of theparagraph and the reason for the deletion is explained at the end of the paragraph.[New paragraph or deleted paragraph without the indication of “added” or “deleted”at the right side of the paragraph is amendments made by the IASB.]

Additions or deletions made within the paragraph in IFRSs would be shaded andunderlined or struck through respectively. [Those additions and deletions which areunderlined or struck through without shading are amendments made by the IASB.]

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Financial Reporting Standard 5 Non-current Assets Held for Sale andDiscontinued Operations (FRS 5) is set out in paragraphs 1-45 andAppendices A-B. All the paragraphs have equal authority. Paragraphs inbold type state the main principles. Terms defined in Appendix A are initalics the first time they appear in the Standard. Definitions of other termsare given in the Glossary for Financial Reporting Standards. FRS 5 shouldbe read in the context of its objective and the Basis for Conclusions, theForeword to Financial Reporting Standards and the Proposed Frameworkfor the Preparation and Presentation of Financial Statements. FRS 108Accounting Policies, Changes in Accounting Estimates and Errors providesa basis for selecting and applying accounting policies in the absence ofexplicit guidance.

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INTRODUCTION

IASB’s reasons for issuing the IFRS

IN1 International Financial Reporting Standard 5 Non-current Assets Heldfor Sale and Discontinued Operations (IFRS 5) sets out requirementsfor the classification, measurement and presentation of non-current assetsheld for sale and replaces IAS 35 Discontinuing Operations.

IN2 Achieving convergence of accounting standards around the world isone of the prime objectives of the International Accounting StandardsBoard. In pursuit of that objective, one of the strategies adopted by theIASB has been to enter into a memorandum of understanding with theFinancial Accounting Standards Board (FASB) in the United States thatsets out the two boards’ commitment to convergence. As a result of thatunderstanding the IASB have undertaken a joint short-term project withthe objective of reducing differences between IFRSs and US GAAPthat are capable of resolution in a relatively short time and can beaddressed outside major projects.

IN3 One aspect of that project involves the two boards considering eachother’s recent standards with a view to adopting high quality accountingsolutions. The IFRS arises from the IASB’s consideration of FASBStatement No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144), issued in 2001.

IN4 SFAS 144 addresses three areas: (i) the impairment of long-lived assetsto be held and used, (ii) the classification, measurement and presentationof assets held for sale and (iii) the classification and presentation ofdiscontinued operations. The impairment of long-lived assets to be heldand used is an area in which there are extensive differences betweenIFRSs and US GAAP. However, those differences were not thought tobe capable of resolution in a relatively short time. Convergence on theother two areas was thought to be worth pursuing within the context ofthe short-term project.

IN5 The IFRS achieves substantial convergence with the requirements ofSFAS 144 relating to assets held for sale, the timing of the classificationof operations as discontinued and the presentation of such operations.

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Main features of the FRS

IN6 The FRS:

(a) adopts the classification ‘held for sale’.

(b) introduces the concept of a disposal group, being a group of assetsto be disposed of, by sale or otherwise, together as a group in asingle transaction, and liabilities directly associated with thoseassets that will be transferred in the transaction.

(c) specifies that assets or disposal groups that are classified as heldfor sale are carried at the lower of carrying amount and fair valueless costs to sell.

(d) specifies that an asset classified as held for sale, or included withina disposal group that is classified as held for sale, is notdepreciated.

(e) specifies that an asset classified as held for sale, and the assetsand liabilities included within a disposal group classified as heldfor sale, are presented separately on the face of the balance sheet.

(f) withdraws FRS 1352004 Discontinuing Operations and replacesit with requirements that:

(i) change the timing of the classification of an operation asdiscontinued. FRS 1352004 classified an operation asdiscontinuing at the earlier of (a) the entity entering intoa binding sale agreement and (b) the board of directorsapproving and announcing a formal disposal plan. TheFRS classifies an operation as discontinued at the datethe operation meets the criteria to be classified as heldfor sale or when the entity has disposed of the operation.

(ii) specify that the results of discontinued operations are tobe shown separately on the face of the income statement.

(iii) prohibit retroactive classification of an operation asdiscontinued, when the criteria for that classification arenot met until after the balance sheet date.

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Financial Reporting Standard 5

Non-current Assets Held for Saleand Discontinued Operations

OBJECTIVE1 The objective of this FRS is to specify the accounting for assets held for

sale, and the presentation and disclosure of discontinued operations. Inparticular, the FRS requires:

(a) assets that meet the criteria to be classified as held for sale to bemeasured at the lower of carrying amount and fair value lesscosts to sell, and depreciation on such assets to cease; and

(b) assets that meet the criteria to be classified as held for sale to bepresented separately on the face of the balance sheet and theresults of discontinued operations to be presented separately inthe income statement.

SCOPE2 The classification and presentation requirements of this FRS apply to

all recognised non-current assets* and to all disposal groups of an entity.The measurement requirements of this FRS apply to all recognised non-current assets and disposal groups (as set out in paragraph 4), except forthose assets listed in paragraph 5 which shall continue to be measuredin accordance with the Standard noted.

3 Assets classified as non-current in accordance with FRS 101Presentation of Financial Statements shall not be reclassified as currentassets until they meet the criteria to be classified as held for sale inaccordance with this FRS. Assets of a class that an entity would normallyregard as non-current that are acquired exclusively with a view to resaleshall not be classified as current unless they meet the criteria to beclassified as held for sale in accordance with this FRS.

* For assets classified according to a liquidity presentation, non-current assets are assetsthat include amounts expected to be recovered more than twelve months after thebalance sheet date. Paragraph 3 applies to the classification of such assets.

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4 Sometimes an entity disposes of a group of assets, possibly with somedirectly associated liabilities, together in a single transaction. Such adisposal group may be a group of cash-generating units, a single cash-generating unit, or part of a cash-generating unit.† The group may includeany assets and any liabilities of the entity, including current assets, currentliabilities and assets excluded by paragraph 5 from the measurementrequirements of this FRS. If a non-current asset within the scope of themeasurement requirements of this FRS is part of a disposal group, themeasurement requirements of this FRS apply to the group as a whole,so that the group is measured at the lower of its carrying amount andfair value less costs to sell. The requirements for measuring the individualassets and liabilities within the disposal group are set out in paragraphs18, 19 and 23.

5 The measurement provisions of this FRS* do not apply to the followingassets, which are covered by the Standards listed, either as individualassets or as part of a disposal group:

(a) deferred tax assets (FRS 1122004 Income Taxes).

(b) assets arising from employee benefits (FRS 1192004 EmployeeBenefits).

(c) financial assets within the scope of FRS 139 FinancialInstruments: Recognition and Measurement.

(d) non-current assets that are accounted for in accordance with thefair value model in FRS 140 Investment Property.

(e) non-current assets that are measured at fair value less estimatedpoint-of-sale costs in accordance with IAS 41 Agriculture1 .

(f) contractual rights under insurance contracts as defined in IFRS4 Insurance Contracts 2 .

† However, once the cash flows from an asset or group of assets are expected to ariseprincipally from sale rather than continuing use, they become less dependent on cashflows arising from other assets, and a disposal group that was part of a cash-generatingunit becomes a separate cash-generating unit.

* Other than paragraphs 18 and 19, which require the assets in question to be measuredin accordance with other applicable FRSs.

1 This provision will be applicable when FRS 141 Agriculture, the equivalent of IAS41, becomes effective for application in Malaysia.

2 This provision will be applicable when FRS 4 Insurance Contracts, the equivalent ofIFRS 4, becomes effective for application in Malaysia.

added

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CLASSIFICATION OF NON-CURRENT ASSETS(OR DISPOSAL GROUPS) AS HELD FOR SALE

6 An entity shall classify a non-current asset (or disposal group) asheld for sale if its carrying amount will be recovered principallythrough a sale transaction rather than through continuing use.

7 For this to be the case, the asset (or disposal group) must be availablefor immediate sale in its present condition subject only to terms that areusual and customary for sales of such assets (or disposal groups) and itssale must be highly probable.

8 For the sale to be highly probable, the appropriate level of managementmust be committed to a plan to sell the asset (or disposal group), and anactive programme to locate a buyer and complete the plan must havebeen initiated. Further, the asset (or disposal group) must be activelymarketed for sale at a price that is reasonable in relation to its currentfair value. In addition, the sale should be expected to qualify forrecognition as a completed sale within one year from the date ofclassification, except as permitted by paragraph 9, and actions requiredto complete the plan should indicate that it is unlikely that significantchanges to the plan will be made or that the plan will be withdrawn.

9 Events or circumstances may extend the period to complete the salebeyond one year. An extension of the period required to complete a saledoes not preclude an asset (or disposal group) from being classified asheld for sale if the delay is caused by events or circumstances beyondthe entity’s control and there is sufficient evidence that the entity remainscommitted to its plan to sell the asset (or disposal group). This will bethe case when the criteria in Appendix B are met.

10 Sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance inaccordance with FRS 116 Property, Plant and Equipment.

11 When an entity acquires a non-current asset (or disposal group)exclusively with a view to its subsequent disposal, it shall classify thenon-current asset (or disposal group) as held for sale at the acquisitiondate only if the one-year requirement in paragraph 8 is met (except aspermitted by paragraph 9) and it is highly probable that any other criteriain paragraphs 7 and 8 that are not met at that date will be met within ashort period following the acquisition (usually within three months).

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12 If the criteria in paragraphs 7 and 8 are met after the balance sheet date,an entity shall not classify a non-current asset (or disposal group) asheld for sale in those financial statements when issued. However, whenthose criteria are met after the balance sheet date but before theauthorisation of the financial statements for issue, the entity shall disclosethe information specified in paragraph 41(a), (b) and (d) in the notes.

Non-current assets that are to be abandoned

13 An entity shall not classify as held for sale a non-current asset (or disposalgroup) that is to be abandoned. This is because its carrying amount willbe recovered principally through continuing use. However, if the disposalgroup to be abandoned meets the criteria in paragraph 32(a)-(c), theentity shall present the results and cash flows of the disposal group asdiscontinued operations in accordance with paragraphs 33 and 34 at thedate on which it ceases to be used. Non-current assets (or disposal groups)to be abandoned include non-current assets (or disposal groups) thatare to be used to the end of their economic life and non-current assets(or disposal groups) that are to be closed rather than sold.

14 An entity shall not account for a non-current asset that has beentemporarily taken out of use as if it had been abandoned.

MEASUREMENT OF NON-CURRENT ASSETS(OR DISPOSAL GROUPS) CLASSIFIED ASHELD FOR SALE

Measurement of a non-current asset (or disposal group)

15 An entity shall measure a non-current asset (or disposal group)classified as held for sale at the lower of its carrying amount andfair value less costs to sell.

16 If a newly acquired asset (or disposal group) meets the criteria to beclassified as held for sale (see paragraph 11), applying paragraph 15will result in the asset (or disposal group) being measured on initialrecognition at the lower of its carrying amount had it not been soclassified (for example, cost) and fair value less costs to sell. Hence, ifthe asset (or disposal group) is acquired as part of a business combination,it shall be measured at fair value less costs to sell.

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17 When the sale is expected to occur beyond one year, the entity shallmeasure the costs to sell at their present value. Any increase in the presentvalue of the costs to sell that arises from the passage of time shall bepresented in profit or loss as a financing cost.

18 Immediately before the initial classification of the asset (or disposalgroup) as held for sale, the carrying amounts of the asset (or all theassets and liabilities in the group) shall be measured in accordance withapplicable FRSs.

19 On subsequent remeasurement of a disposal group, the carrying amountsof any assets and liabilities that are not within the scope of themeasurement requirements of this FRS, but are included in a disposalgroup classified as held for sale, shall be remeasured in accordancewith applicable FRSs before the fair value less costs to sell of the disposalgroup is remeasured.

Recognition of impairment losses and reversals

20 An entity shall recognise an impairment loss for any initial or subsequentwrite-down of the asset (or disposal group) to fair value less costs tosell, to the extent that it has not been recognised in accordance withparagraph 19.

21 An entity shall recognise a gain for any subsequent increase in fair valueless costs to sell of an asset, but not in excess of the cumulativeimpairment loss that has been recognised either in accordance with thisFRS or previously in accordance with FRS 136 Impairment of Assets.

22 An entity shall recognise a gain for any subsequent increase in fair valueless costs to sell of a disposal group:

(a) to the extent that it has not been recognised in accordance withparagraph 19; but

(b) not in excess of the cumulative impairment loss that has beenrecognised, either in accordance with this FRS or previously inaccordance with FRS 136, on the non-current assets that arewithin the scope of the measurement requirements of this FRS.

23 The impairment loss (or any subsequent gain) recognised for a disposalgroup shall reduce (or increase) the carrying amount of the non-currentassets in the group that are within the scope of the measurementrequirements of this FRS, in the order of allocation set out in paragraphs104(a) and (b) and 122 of FRS 136.

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24 A gain or loss not previously recognised by the date of the sale of a non-current asset (or disposal group) shall be recognised at the date ofderecognition. Requirements relating to derecognition are set out in:

(a) paragraphs 67-72 of FRS 116 for property, plant and equipment,and

(b) paragraphs 112-117 of FRS 138 Intangible Assets for intangibleassets.

25 An entity shall not depreciate (or amortise) a non-current asset while itis classified as held for sale or while it is part of a disposal group classifiedas held for sale. Interest and other expenses attributable to the liabilitiesof a disposal group classified as held for sale shall continue to berecognised.

Changes to a plan of sale

26 If an entity has classified an asset (or disposal group) as held for sale,but the criteria in paragraphs 7-9 are no longer met, the entity shallcease to classify the asset (or disposal group) as held for sale.

27 The entity shall measure a non-current asset that ceases to be classifiedas held for sale (or ceases to be included in a disposal group classifiedas held for sale) at the lower of:

(a) its carrying amount before the asset (or disposal group) wasclassified as held for sale, adjusted for any depreciation,amortisation or revaluations that would have been recognisedhad the asset (or disposal group) not been classified as held forsale, and

(b) its recoverable amount at the date of the subsequent decisionnot to sell.*

* If the non-current asset is part of a cash-generating unit, its recoverable amount is thecarrying amount that would have been recognised after the allocation of anyimpairment loss arising on that cash-generating unit in accordance with FRS 136.

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28 The entity shall include any required adjustment to the carrying amountof a non-current asset that ceases to be classified as held for sale inincome† from continuing operations in the period in which the criteriain paragraphs 7-9 are no longer met. The entity shall present thatadjustment in the same income statement caption used to present a gainor loss, if any, recognised in accordance with paragraph 37.

29 If an entity removes an individual asset or liability from a disposal groupclassified as held for sale, the remaining assets and liabilities of thedisposal group to be sold shall continue to be measured as a group onlyif the group meets the criteria in paragraphs 7-9. Otherwise, the remainingnon-current assets of the group that individually meet the criteria to beclassified as held for sale shall be measured individually at the lower oftheir carrying amounts and fair values less costs to sell at that date. Anynon-current assets that do not meet the criteria shall cease to be classifiedas held for sale in accordance with paragraph 26.

PRESENTATION AND DISCLOSURE30 An entity shall present and disclose information that enables users

of the financial statements to evaluate the financial effects ofdiscontinued operations and disposals of non-current assets (ordisposal groups).

Presenting discontinued operations

31 A component of an entity comprises operations and cash flows that canbe clearly distinguished, operationally and for financial reportingpurposes, from the rest of the entity. In other words, a component of anentity will have been a cash-generating unit or a group of cash-generatingunits while being held for use.

32 A discontinued operation is a component of an entity that either hasbeen disposed of, or is classified as held for sale, and

(a) represents a separate major line of business or geographical areaof operations,

† Unless the asset is property, plant and equipment or an intangible asset that had beenrevalued in accordance with FRS 116 or FRS 138 before classification as held forsale, in which case the adjustment shall be treated as a revaluation increase or decrease.

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(b) is part of a single co-ordinated plan to dispose of a separate majorline of business or geographical area of operations or

(c) is a subsidiary acquired exclusively with a view to resale.

33 An entity shall disclose:

(a) a single amount on the face of the income statement comprisingthe total of:

(i) the post-tax profit or loss of discontinued operations and

(ii) the post-tax gain or loss recognised on the measurementto fair value less costs to sell or on the disposal of theassets or disposal group(s) constituting the discontinuedoperation.

(b) an analysis of the single amount in (a) into:

(i) the revenue, expenses and pre-tax profit or loss ofdiscontinued operations;

(ii) the related income tax expense as required by paragraph79(g) of FRS 1122004;

(iii) the gain or loss recognised on the measurement to fairvalue less costs to sell or on the disposal of the assets ordisposal group(s) constituting the discontinued operation;and

(iv) the related income tax expense as required by paragraph79(g) of FRS 1122004.

The analysis may be presented in the notes or on the face of theincome statement. If it is presented on the face of the incomestatement it shall be presented in a section identified as relatingto discontinued operations, ie separately from continuingoperations. The analysis is not required for disposal groups thatare newly acquired subsidiaries that meet the criteria to beclassified as held for sale on acquisition (see paragraph 11).

(c) the net cash flows attributable to the operating, investing andfinancing activities of discontinued operations. These disclosuresmay be presented either in the notes or on the face of the financialstatements. These disclosures are not required for disposal groupsthat are newly acquired subsidiaries that meet the criteria to beclassified as held for sale on acquisition (see paragraph 11).

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34 An entity shall re-present the disclosures in paragraph 33 for prior periodspresented in the financial statements so that the disclosures relate to alloperations that have been discontinued by the balance sheet date for thelatest period presented.

35 Adjustments in the current period to amounts previously presented indiscontinued operations that are directly related to the disposal of adiscontinued operation in a prior period shall be classified separately indiscontinued operations. The nature and amount of such adjustmentsshall be disclosed. Examples of circumstances in which theseadjustments may arise include the following:

(a) the resolution of uncertainties that arise from the terms of thedisposal transaction, such as the resolution of purchase priceadjustments and indemnification issues with the purchaser.

(b) the resolution of uncertainties that arise from and are directlyrelated to the operations of the component before its disposal,such as environmental and product warranty obligations retainedby the seller.

(c) the settlement of employee benefit plan obligations, providedthat the settlement is directly related to the disposal transaction.

36 If an entity ceases to classify a component of an entity as held for sale,the results of operations of the component previously presented indiscontinued operations in accordance with paragraphs 33-35 shall bereclassified and included in income from continuing operations for allperiods presented. The amounts for prior periods shall be described ashaving been re-presented.

Gains or losses relating to continuing operations

37 Any gain or loss on the remeasurement of a non-current asset (or disposalgroup) classified as held for sale that does not meet the definition of adiscontinued operation shall be included in profit or loss from continuingoperations.

Presentation of a non-current asset or disposal groupclassified as held for sale

38 An entity shall present a non-current asset classified as held for saleand the assets of a disposal group classified as held for sale separatelyfrom other assets in the balance sheet. The liabilities of a disposal groupclassified as held for sale shall be presented separately from other

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liabilities in the balance sheet. Those assets and liabilities shall not beoffset and presented as a single amount. The major classes of assets andliabilities classified as held for sale shall be separately disclosed eitheron the face of the balance sheet or in the notes, except as permitted byparagraph 39. An entity shall present separately any cumulative incomeor expense recognised directly in equity relating to a non-current asset(or disposal group) classified as held for sale.

39 If the disposal group is a newly acquired subsidiary that meets the criteriato be classified as held for sale on acquisition (see paragraph 11),disclosure of the major classes of assets and liabilities is not required.

40 An entity shall not reclassify or re-present amounts presented for non-current assets or for the assets and liabilities of disposal groups classifiedas held for sale in the balance sheets for prior periods to reflect theclassification in the balance sheet for the latest period presented.

Additional disclosures

41 An entity shall disclose the following information in the notes in theperiod in which a non-current asset (or disposal group) has been eitherclassified as held for sale or sold:

(a) a description of the non-current asset (or disposal group);

(b) a description of the facts and circumstances of the sale, or leadingto the expected disposal, and the expected manner and timing ofthat disposal;

(c) the gain or loss recognised in accordance with paragraphs 20-22and, if not separately presented on the face of the incomestatement, the caption in the income statement that includes thatgain or loss;

(d) if applicable, the segment in which the non-current asset (ordisposal group) is presented in accordance with FRS 1142004

Segment Reporting.

42 If either paragraph 26 or paragraph 29 applies, an entity shall disclose,in the period of the decision to change the plan to sell the non-currentasset (or disposal group), a description of the facts and circumstancesleading to the decision and the effect of the decision on the results ofoperations for the period and any prior periods presented.

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TRANSITIONAL PROVISIONS43 The FRS shall be applied prospectively to non-current assets (or disposal

groups) that meet the criteria to be classified as held for sale andoperations that meet the criteria to be classified as discontinued afterthe effective date of the FRS. An entity may apply the requirements ofthe FRS to all non-current assets (or disposal groups) that meet thecriteria to be classified as held for sale and operations that meet thecriteria to be classified as discontinued after any date before the effectivedate of the FRS, provided the valuations and other information neededto apply the FRS were obtained at the time those criteria were originallymet.

EFFECTIVE DATE44 An entity shall apply this FRS for annual periods beginning on or after

1 January 2006. Earlier application is encouraged. If an entity appliesthe FRS for a period before 1 January 2006, it shall disclose that fact.

WITHDRAWAL OF FRS 1352004

45 This FRS supersedes FRS 1352004 Discontinuing Operations.

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Appendix A

Defined termsThis appendix is an integral part of the FRS.

cash-generating unit The smallest identifiable group of assets thatgenerates cash inflows that are largelyindependent of the cash inflows from other assetsor groups of assets.

component of an entity Operations and cash flows that can be clearlydistinguished, operationally and for financialreporting purposes, from the rest of the entity.

costs to sell The incremental costs directly attributable to thedisposal of an asset (or disposal group),excluding finance costs and income tax expense.

current asset An asset that satisfies any of the followingcriteria:

(a) it is expected to be realised in, or is intendedfor sale or consumption in, the entity’snormal operating cycle;

(b) it is held primarily for the purpose of beingtraded;

(c) it is expected to be realised within twelvemonths after the balance sheet date; or

(d) it is cash or a cash equivalent asset unlessit is restricted from being exchanged orused to settle a liability for at least twelvemonths after the balance sheet date.

discontinued operation A component of an entity that either has beendisposed of or is classified as held for sale and:

(a) represents a separate major line of businessor geographical area of operations;

(b) is part of a single co-ordinated plan todispose of a separate major line of businessor geographical area of operations; or

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(c) is a subsidiary acquired exclusively with aview to resale.

disposal group A group of assets to be disposed of, by sale orotherwise, together as a group in a singletransaction, and liabilities directly associated withthose assets that will be transferred in thetransaction. The group includes goodwill acquiredin a business combination if the group is a cash-generating unit to which goodwill has beenallocated in accordance with the requirements ofparagraphs 80-87 of FRS 136 Impairment ofAssets or if it is an operation within such a cash-generating unit.

fair value The amount for which an asset could beexchanged, or a liability settled, betweenknowledgeable, willing parties in an arm’s lengthtransaction.

firm purchase An agreement with an unrelated party, binding oncommitment both parties and usually legally enforceable, that

(a) specifies all significant terms, including theprice and timing of the transactions, and (b)includes a disincentive for non-performance thatis sufficiently large to make performance highlyprobable.

highly probable Significantly more likely than probable.

non-current asset An asset that does not meet the definition of acurrent asset.

probable More likely than not.

recoverable amount The higher of an asset’s fair value less costs tosell and its value in use.

value in use The present value of estimated future cash flowsexpected to arise from the continuing use of anasset and from its disposal at the end of its usefullife.

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Appendix B

Application supplementThis appendix is an integral part of the FRS.

Extension of the period required to complete a sale

B1 As noted in paragraph 9, an extension of the period required to completea sale does not preclude an asset (or disposal group) from being classifiedas held for sale if the delay is caused by events or circumstances beyondthe entity’s control and there is sufficient evidence that the entity remainscommitted to its plan to sell the asset (or disposal group). An exceptionto the one-year requirement in paragraph 8 shall therefore apply in thefollowing situations in which such events or circumstances arise:

(a) at the date an entity commits itself to a plan to sell a non-currentasset (or disposal group) it reasonably expects that others (not abuyer) will impose conditions on the transfer of the asset (ordisposal group) that will extend the period required to completethe sale, and:

(i) actions necessary to respond to those conditions cannotbe initiated until after a firm purchase commitment isobtained, and

(ii) a firm purchase commitment is highly probable withinone year.

(b) an entity obtains a firm purchase commitment and, as a result, abuyer or others unexpectedly impose conditions on the transferof a non-current asset (or disposal group) previously classifiedas held for sale that will extend the period required to completethe sale, and:

(i) timely actions necessary to respond to the conditions havebeen taken, and

(ii) a favourable resolution of the delaying factors is expected.

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(c) during the initial one-year period, circumstances arise that werepreviously considered unlikely and, as a result, a non-currentasset (or disposal group) previously classified as held for sale isnot sold by the end of that period, and:

(i) during the initial one-year period the entity took actionnecessary to respond to the change in circumstances,

(ii) the non-current asset (or disposal group) is being activelymarketed at a price that is reasonable, given the changein circumstances, and

(iii) the criteria in paragraphs 7 and 8 are met.

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Consequential Amendments to FRS 1142004

Segment ReportingThe amendments shall be applied for annual periods beginning on or after1 January 2006. If an entity applies FRS 5 Non-current Assets Held for Saleand Discontinued Operations for an earlier period, these amendments shall beapplied for that earlier period.

FRS 1142004 Segment Reporting, is amended as described below:

Paragraph 53 is amended to read as follows:

53. An enterprise should entity shall disclose segment revenue result foreach reportable segment, presenting the result from continuingoperations separately from the result from discontinued operations.Segment revenue from sales to external customers and segmentrevenue from transactions with other segments should be separatelyreported.

Paragraph 53A is added as follows:

53A. An entity shall restate segment results in prior periods presented inthe financial statements so that the disclosures required by paragraph53 relating to discontinued operations relate to all operations thathad been classified as discontinued at the balance sheet date of thelatest period presented.

Paragraph 68 is amended to read as follows:

68. An enterprise should entity shall present a reconciliation betweenthe information disclosed for reportable segments and the aggregatedinformation in the consolidated or enterprise individual financialstatements. In presenting the reconciliation, the entity shall reconcilesegment revenue should be reconciled to enterprise entity revenuefrom external customers (including disclosures of the amount ofenterprise entity revenue from external customers not included inany segment’s revenue); segment result should from continuingoperations shall be reconciled to a comparable measure of enterpriseentity operating profit or loss from continuing operations as well asto enterprise net entity profit or loss from continuing operations;segment result from discontinued operations shall be reconciled toentity net profit or loss from discontinued operations; segment assetsshould shall be reconciled to enterprise entity assets; and segmentliabilities should shall be reconciled to enterprise entity liabilities.

Addendum✂

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Consequential Amendment to FRS 1372004

Provisions, Contingent Liabilities and ContingentAssetsThe amendment shall be applied for annual periods beginning on or after1 January 2006. If an entity applies FRS 5 Non-current Assets Held for Saleand Discontinued Operations for an earlier period, this amendment shall beapplied for that earlier period.

In FRS 1372004 Provisions, Contingent Liabilities and Contingent Assets,

paragraph 10 is amended to read as follows:

10. This Standard applies to provisions for restructurings (includingdiscontinuing discontinued operations). When a restructuring meets thedefinition of a discontinuing discontinued operation, additionaldisclosures may be required by FRS 1352004

Discontinuing Operations

FRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Addendum✂