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Is it that every subsidairy held for sale is also a discontinued operation?
And do we separately show a held for sale sub on the P/L account?
Thanks 🙂
No, it can be held for sale and still continuing. Yes, we show Ahfs separate from the consolidation
How do i present it
Is it like this
Profit from continuing operations
Profit from ahfsAsset held for sale is just a separate line item called ‘Asset held for sale’ under current assets in the SOFP. Current because one of the criteria of assets held for sale is that it is probable that it will be sold within 12 months.
On sale then you recognise a gain or loss on disposal in SOCI.
In SOCI all you are showing are income and expenses for the year and gains/losses in P&L or that pass through equity in OCI. Therefore, if you just have an asset as held for sale and it isn’t sold yet you won’t have a gain/loss on disposal. All you will have in SOCI is a gain/loss on revaluation when you initially changed the classification from a normal subsidiary to held for sale. As you know when an asset becomes held-for sale we have to :
– first charge depreciation up to date when we decide to sell
– then we value at lower of carrying amount (after step 1) and fair value less cost to sell
If the FV is lower than the CA this will mean a revaluation downwards which is recognised in SOCIThanks atab
So we dont show its revenue n expenses separately under the Csoci like we do with discontinued operations right?I appreciate ur response
It depends. If a subsidiary was acquired exclusively with a view to sell in the next 12 months then the parent just accounts for it as an asset held for sale rather than consolidate it.
However, if a subsidiary had previously been consolidated and is now being held for sale you must continue to consolidate the subsidiary until it is actually disposed of. It is not excluded from consolidation.
An entity that is committed to a sale involving loss of control of a subsidiary that qualifies for held-for-sale shall classify all of the assets and liabilities of that subsidiary as held for sale, even if the entity will retain a non-controlling interest in its former subsidiary after the sale.
As it says in google when you type in “IFRS5 subsidiary now held for sale” this is what you get …..
“Subsidiaries Held for Disposal
IFRS 5 applies to accounting for an investment in a subsidiary for which control is intended to be temporary because the subsidiary was acquired and is held exclusively with a view to its subsequent disposal in the near future. For such a subsidiary, if it is highly probable that the sale will be completed within 12 months then the parent should account for its investment in the subsidiary under IFRS 5 as an asset held for sale, rather than consolidate it under IAS 27.
However, IAS 27 still requires that if a subsidiary that had previously been consolidated is now being held for sale, the parent must continue to consolidate such a subsidiary until it is actually disposed of. It is not excluded from consolidation and reported as an asset held for sale under IFRS 5.
An entity that is committed to a sale involving loss of control of a subsidiary that qualifies for held-for-sale classification under IFRS 5 shall classify all of the assets and liabilities of that subsidiary as held for sale, even if the entity will retain a non-controlling interest in its former subsidiary after the sale.”It’s really quite straight-forward isn’t it!
Ok so we consolidate a subsidiary as normal if it was consolidated previously.
ThanksHello dear tutor
Hope that you are well
My question is about consolidated cashflow when we have classified our subsidiary as ahfs(asset held for sale)…
How should we show the subsidiary’s cash in consolidated SOCF?
Many thanks
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