Measuring and presenting subsidiaries acquired with a view to sale and classified as held for sale Entity A acquires an entity H, which is a holding company with two subsidiaries, S1 and S2. S2 is acquired exclusively with a view to sale and meets the criteria to be classified as held for sale. Accordingly, S2 is also a discontinued operation .The fair value less costs to sell of S2 is €135. A accounts for S2 as follows:
- initially, A measures the identifiable liabilities of S2 at fair value, say at €40;
- initially, A measures the acquired assets as the fair value less costs to sell of S2 (€135) plus the fair value of the identifiable liabilities (€40), i.e. at €175;
- at the balance sheet date, A remeasures the disposal group at the lower of its cost and fair value less costs to sell, say at €130. The liabilities are remeasured in accordance with applicable IFRSs, say at €35. The total assets are measured at €130 + €35, i.e. at €165;
- at the balance sheet date, A presents the assets and liabilities separately from other assets and liabilities in its consolidated financial statements as illustrated in the statement of comprehensive income, A presents the total of the post-tax profit or loss of S2 and the post-tax gain or loss recognised on the subsequent remeasurement of S2, which equals the remeasurement of the disposal group from €135 to €130.
Further analysis of the assets and liabilities or of the change in value of the disposal group is not required.
The final sentence in the above example says no further analysis of the assets and liabilities is required. This must refer to there being no such disclosure requirement for financial statements. A detailed purchase price analysis and tracking of the acquired entity may still be needed, notwithstanding a partial relaxation of what is required to be disclosed by IFRS 5. This may be needed to be able to determine the split between gross assets and liabilities and how movements in the carrying amounts are reflected in profit or loss, or other comprehensive income.
IFRS 5 explains that disclosures in other IFRSs do not apply to non-current assets (or disposal groups) classified as held for sale or discontinued operations unless those IFRSs require:
- specific disclosures in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations; or
- disclosures about the measurement of assets and liabilities within a disposal group that are not within the scope of the measurement requirement of IFRS 5 and such disclosures are not already provided in the other notes to the financial statements.
The standard goes on to say that additional disclosures about non-current assets (or disposal groups) classified as held for sale or discontinued operations may be necessary to comply with the general requirements of IAS 1, in particular paragraphs 15 and 125 of that Standard.Those provisions deal with fair presentation and estimation uncertainty and are discussed respectively.