4.2 Noncurrent Assets Held for Sale and Discontinued Operations

Though IFRS Accounting Standards and U.S. GAAP have similar guidance on the accounting for noncurrent assets held for sale and for discontinued operations, there is a special treatment for assets held for distribution under IFRS Accounting Standards, as shown in the table below.

Topic	IFRS Accounting Standards (IFRS 5)	U.S. GAAP (ASC 360-10, ASC 205-20)
Assets held for distribution to owners	A long-lived asset to be distributed to owners is measured at the lower of (1) the carrying amount and (2) the fair value less the costs to distribute. Such assets are treated in a manner similar to assets held for sale.	ASC 360-10-45-15 states that a long-lived asset to be distributed to owners “shall continue to be classified as held and used until it is disposed of.” Therefore, it is measured at cost less accumulated depreciation and impairment. Accordingly, a disposal group to be spun off to shareholders would be classified as a discontinued operation earlier under IFRS Accounting Standards than under U.S. GAAP.
Discontinued operations — definition	As indicated in paragraph 32 of IFRS 5, “[a] discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and (a) represents a separate major line of business or geographical area of operations, (b) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations or (c) is a subsidiary acquired exclusively with a view to resale.”	As indicated in ASC 205-20-45-1B and 45-1C, “the disposal of a component of an entity or a group of components of an entity [should] be reported in discontinued operations” if (1) the assets (and liabilities) meet the criteria to be classified as held for sale, have been sold, or have been otherwise disposed of (e.g., abandonment) and (2) the disposal represents “a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” Examples of such a strategic shift may include the disposal of “a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity.” In addition, under ASC 205-20-45-1D, a business or nonprofit activity that meets the held-for-sale classification criteria upon acquisition should be reported as a discontinued operation regardless of whether its disposal would represent a strategic shift or have a major effect on the entity’s operations or financial results.
Held-for-sale assets — equity method investments	All noncurrent assets (including those in a discontinued operation) classified as held for sale are measured at the lower of carrying amount or fair value less costs to sell. The equity method is discontinued for equity method investments once they are classified as held for sale.	Equity method investments are specifically excluded from the scope of ASC 360-10. Entities continue to apply the equity method even if the investment is part of a disposal group classified as held for sale or discontinued operations.
Discontinued operations — presentation and disclosure	In accordance with paragraph 40 of IFRS 5, an entity should not “reclassify or re-present” the prior period(s) in a comparative balance sheet to reflect the assets and liabilities of the disposal groups classified as held for sale in the current period.	If the criteria for discontinued-operations reporting are met, the assets and liabilities of the disposal group must be presented separately on the face of the balance sheet both in the current period (if held for sale) and in prior periods. Even a discontinued operation that is classified as held for sale and sold in the same reporting period would be presented as held for sale in the prior-period balance sheet.