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IFRS 5

Non-current Assets Held for Sale and Discontinued Operations

IFRS 5 specifies the accounting for non-current assets (or disposal groups) held for sale, requiring them to be measured at the lower of carrying amount and fair value less costs to sell and presented separately, and sets out the presentation requirements for discontinued operations. [S1]

Effective 2005-01-01Related: IAS 16 · IAS 36 · IAS 40 · IFRS 3 · IFRS 13

Overview

IFRS 5 applies once management commits to a plan to sell a non-current asset or disposal group rather than continue using it: from that point, the asset's carrying amount is expected to be recovered principally through sale rather than continuing use, and it is classified as held for sale, measured at the lower of its carrying amount and fair value less costs to sell, and depreciation/amortisation ceases. [S1] 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, is part of a single coordinated disposal plan for such a line or area, or is a subsidiary acquired exclusively with a view to resale; its results are presented as a single line item in the statement of profit or loss, separately from continuing operations. [S2]

Why it matters

How and when an entity classifies an asset or business as held for sale, and whether it qualifies as a discontinued operation, changes both measurement (a potential immediate write-down to fair value less costs to sell) and presentation (segregating results from continuing operations so users can assess ongoing performance separately from what is being exited). Classifying too early overstates the certainty of a disposal that may not happen; classifying too late means continuing to depreciate an asset that should already be held at a recoverable, sale-focused amount, and denying users the separate discontinued-operations view of a business genuinely being exited.

Scope

Applies to all recognised non-current assets and disposal groups, setting measurement requirements for those held for sale (with limited exceptions for assets measured under other Standards using their own fair-value-related bases, e.g. certain financial assets, investment property under the fair value model, and biological assets measured at fair value less costs to sell, which continue to apply those Standards' own measurement bases even within a disposal group). It sets presentation and disclosure requirements for all disposals of non-current assets and for all discontinued operations.

Key definitions

term
Held for sale
definition
Classification applied to a non-current asset (or disposal group) whose carrying amount will be recovered principally through a sale transaction rather than through continuing use.
term
Disposal group
definition
A group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction.
term
Discontinued operation
definition
A component of an entity that has either been disposed of or is classified as held for sale, and represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line or area, or is a subsidiary acquired exclusively with a view to resale.
term
Fair value less costs to sell
definition
Fair value (per IFRS 13) less the incremental costs directly attributable to the disposal of an asset or disposal group, excluding finance costs and income tax expense.
term
Highly probable
definition
Significantly more likely than probable; the threshold used, alongside other criteria, to determine whether a sale qualifies for held-for-sale classification.

Recognition

A non-current asset or disposal group is classified as held for sale only if it is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets, and the sale is highly probable: appropriate management is committed to a plan to sell, an active programme to locate a buyer has been initiated, the asset is being actively marketed at a reasonable price relative to its current fair value, the sale is expected to complete within one year of classification, and actions required to complete the plan indicate it is unlikely to be significantly changed or withdrawn. An asset to be abandoned (rather than sold) is not classified as held for sale, since its carrying amount will be recovered through continuing use to the end of its life, not through sale.

Initial measurement

Immediately before initial classification as held for sale, the carrying amounts of the asset (or all assets and liabilities in a disposal group) are measured in accordance with applicable IFRS Standards (e.g. an impairment test under IAS 36 if indicators exist). On classification as held for sale, the asset or disposal group is then measured at the lower of its carrying amount and fair value less costs to sell, with any resulting write-down recognised as an impairment loss.

Subsequent measurement

While classified as held for sale, a non-current asset is not depreciated or amortised (even if still in use), and the asset or disposal group continues to be remeasured at each subsequent reporting date at the lower of carrying amount and fair value less costs to sell, with further write-downs recognised as impairment losses and subsequent increases in fair value less costs to sell recognised as a gain, but only to the extent of cumulative impairment losses previously recognised under IFRS 5 (not below the original pre-classification carrying amount). If the criteria are no longer met, the asset is reclassified out of held for sale and measured at the lower of its carrying amount had it never been classified as held for sale (adjusted for depreciation, amortisation or revaluations that would otherwise have been recognised) and its recoverable amount at the date of the decision not to sell.

Presentation

Non-current assets (and the assets of a disposal group) classified as held for sale are presented separately from other assets in the statement of financial position, and the liabilities of a disposal group are presented separately from other liabilities; these are not offset against each other. A single amount is presented in the statement of profit or loss comprising the total of the post-tax profit or loss of discontinued operations and the post-tax gain or loss recognised on the remeasurement to fair value less costs to sell or on disposal, with an analysis of this amount (revenue, expenses, pre-tax profit or loss, related tax expense, and the gain or loss on remeasurement/disposal and its related tax) presented either in the notes or on the face of the statement. Comparative statement of profit or loss information is re-presented for all periods shown to reflect the discontinued classification, though the statement of financial position is not restated retrospectively for held-for-sale classification.

Disclosure checklist

  • A description of the non-current asset (or disposal group) classified as held for sale, and a description of the facts and circumstances of the sale (or of becoming a discontinued operation) and its expected manner and timing.
  • Any impairment loss (and any subsequent reversal) recognised on classification as held for sale, or on subsequent remeasurement, and the line item in the statement of profit or loss in which it is included.
  • If applicable, the reportable segment in which the asset (or disposal group) is presented under IFRS 8.
  • For discontinued operations: a single amount in the statement of profit or loss comprising post-tax profit or loss and the post-tax gain or loss on remeasurement/disposal, with the required analysis of revenue, expenses, pre-tax profit or loss, and related tax.
  • Net cash flows attributable to the operating, investing and financing activities of discontinued operations.
  • If a non-current asset or disposal group ceases to be classified as held for sale, a description of the facts and circumstances leading to the decision and the effect on results of operations.

Practical treatment

The practical discipline is testing the held-for-sale criteria as a genuine checklist at each reporting date, not applying it loosely to any asset management merely intends to sell eventually: board-level commitment (evidenced by minutes), an active marketing programme at a realistic price, and a credible one-year completion timeline are all needed together. Extensions beyond one year do not automatically disqualify held-for-sale classification if the delay is caused by events beyond the entity's control and there is sufficient evidence the entity remains committed to the plan (for example, awaiting a regulatory or shareholder approval that is outside the entity's control). Distinguishing a discontinued operation (a separate major line of business or geographical area) from the disposal of a single asset or a minor business unit matters significantly for presentation, since only the former qualifies for the separate discontinued-operations line in profit or loss. See nigeria_notes for the board-approval evidence and tax considerations relevant to Nigerian disposals.

Common mistakes

  • Classifying an asset as held for sale based only on management's general intention to sell at some point, without the specific active marketing programme and realistic one-year timeline the criteria require.
  • Continuing to depreciate an asset after it has been properly classified as held for sale.
  • Recognising a gain on remeasurement of a held-for-sale asset in excess of cumulative impairment losses previously recognised under IFRS 5.
  • Treating the disposal of a minor product line or a single asset as a 'discontinued operation' when it does not represent a separate major line of business or geographical area of operations.
  • Failing to re-present comparative statement of profit or loss information for all periods presented once an operation is classified as discontinued.
  • Classifying an asset to be abandoned (rather than sold) as held for sale, when its carrying amount will in fact be recovered through continued use rather than a sale transaction.

CFO checklist

  • Maintain board-minuted evidence of commitment to a specific disposal plan before classifying any asset or disposal group as held for sale.
  • Confirm an active marketing programme at a realistic price is genuinely underway, not merely contemplated, before classification.
  • Cease depreciation/amortisation immediately on proper classification as held for sale, and monitor for this being missed in practice.
  • Assess whether a disposal represents a separate major line of business or geographical area (discontinued operation) or a lesser disposal, since this determines profit or loss presentation.
  • Re-present comparative statement of profit or loss figures for all periods presented once a discontinued operation classification is made.
  • Engage tax and company law advisers early on CGT, stamp duty and CAC/CAMA approval implications of the planned disposal structure.

FAQs

q
We've decided to close (not sell) an old factory and just run down its remaining useful life — is this held for sale?
a
No. An asset to be abandoned is not classified as held for sale, because its carrying amount will be recovered through continuing use rather than a sale transaction; however, if closing the factory represents a separate major line of business or geographical area, its results may still qualify for discontinued operations presentation from the date operations actually cease, even though it was never classified as held for sale.
q
We expect our disposal to take 18 months to complete due to a pending regulatory approval — can we still classify it as held for sale now?
a
Possibly, yes. The one-year completion expectation can be extended if the delay is caused by events or circumstances beyond the entity's control (such as awaiting a third-party regulatory approval) and there is sufficient evidence the entity remains committed to its plan to sell; this is a specific exception, not a general relaxation of the one-year test.
q
We sold a small retail outlet that was part of our wider retail segment — do we present it as a discontinued operation?
a
Only if that outlet represented a separate major line of business or geographical area of operations, or was part of a single coordinated plan to dispose of such a line or area; the disposal of a single, relatively minor outlet within a continuing retail segment would not typically meet the discontinued operations definition and would instead be presented within continuing operations, with disclosure of the disposal gain or loss.

Nigeria application notes

Regulatory overlay

IFRS 5 applies in full to Nigerian public interest entities under the FRCN Act 2011 mandate. [S3] A board resolution evidencing commitment to a disposal plan is not only good IFRS 5 evidential practice but is often a practical necessity in Nigeria, since CAMA 2020 requires shareholder approval for a company to dispose of assets exceeding 50% of its total assets, and disposals involving a change of corporate control or structure typically require CAC notification and, for larger or regulated-sector transactions, sector regulator consent. [S4][S5]

Tax interaction (Nigeria)

Gains on the disposal of non-current assets or a disposal group are subject to capital gains tax, harmonised with the standard companies income tax rate at 30% under the Nigeria Tax Act 2025 (up from a historic 10% rate); this is a significant factor in Nigerian disposal planning and should be modelled alongside the accounting measurement, since the tax base for the gain (cost less allowances, per tax rules) will generally differ from the IFRS 5 carrying amount used for accounting purposes. [S_TAX2][S_TAX1] Stamp duty may also apply to instruments transferring the underlying assets, depending on deal structure. [S6] None of this changes the IFRS 5 measurement and presentation requirements themselves. Nigerian rates, thresholds, exemptions, incentives and filing rules referenced in this file (including CIT, VAT, CGT, stamp duties, withholding tax categories, and the small-company threshold) should be independently verified against the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, CAC/CAMA requirements, FRCN guidance, and current NRS practice at the reporting or filing date, since thresholds, rates and reliefs are subject to periodic revision and to sector- or entity-specific qualifying conditions. This file does not constitute legal or tax advice. [S_TAX1][S_TAX2]

FX considerations

Where fair value less costs to sell for a Nigerian disposal group is estimated with reference to foreign-currency-denominated offers or comparable transactions (common in cross-border or private-equity-backed disposals), the naira equivalent should be determined on a consistent, disclosed exchange rate basis at each measurement date, since naira volatility between the classification date and the eventual completion date can materially change the fair value less costs to sell estimate used for interim remeasurement.

SME practical note

Nigerian SME clients often describe an asset as 'for sale' informally, well before a genuine, evidenced disposal plan and active marketing programme exist; Outliers recommends testing each of the IFRS 5 criteria explicitly, with dated evidence (board minutes, marketing engagement letters, broker instructions), before agreeing to held-for-sale classification, since premature classification is a common and avoidable audit finding.

Common Nigerian pitfalls

  • Classifying an asset as held for sale based on informal management intent, without board-minuted commitment or an active marketing programme.
  • Overlooking the CAMA 2020 shareholder approval threshold (50% of total assets) when planning a disposal, causing delay or invalidity of the transaction.
  • Assuming the capital gains tax rate on a disposal is still 10%, when it has been harmonised to 30% under the Nigeria Tax Act 2025.
  • Failing to re-present comparative income statement figures for a genuine discontinued operation, understating the year-on-year comparability of continuing operations.

FRC pronouncements

No FRCN pronouncement specific to IFRS 5 classification or measurement has been identified; the relevant FRCN context is its overarching mandate to promote IFRS compliance. [S3]

Worked examples

Classification and measurement of a manufacturing plant held for sale

A Nigerian manufacturer's board approves and minutes a plan, in September, to sell an underused production plant. An agent is engaged the same month to actively market the plant at ₦90,000,000, a price considered reasonable relative to its current fair value, with sale expected to complete within eight months. The plant's carrying amount at that date is ₦95,000,000. Estimated costs to sell (agent commission and legal fees) are ₦5,000,000.

Facts

Workings

All held-for-sale criteria are met: available for immediate sale, active marketing at a reasonable price, board committed, expected completion within one year.

Fair value less costs to sell: 90,000,000 - 5,000,000 = 85,000,000

Compare to carrying amount: 95,000,000 (carrying amount) vs 85,000,000 (fair value less costs to sell) — the lower amount applies.

Impairment loss required: 95,000,000 - 85,000,000 = 10,000,000

Journal entries

Reclassify the plant to held for sale and recognise the impairment loss to reduce it to fair value less costs to sell.

AccountDr (₦)Cr (₦)
Impairment loss (profit or loss)10,000,000
Non-current assets held for sale85,000,000
Property, plant and equipment (plant, at carrying amount)95,000,000

Presenting a discontinued operation

A Nigerian conglomerate decides to exit its entire logistics division, which represents a separate major line of business, through a single coordinated disposal plan approved by the board. For the year, the logistics division generated revenue of ₦300,000,000 and a pre-tax profit of ₦40,000,000, with related tax expense of ₦12,000,000. On disposal before year-end, a pre-tax loss on disposal of ₦15,000,000 was recognised, with a related tax credit of ₦4,500,000.

Facts

Workings

Post-tax profit of the discontinued operation (before disposal): 40,000,000 - 12,000,000 = 28,000,000

Post-tax loss on disposal: 15,000,000 - 4,500,000 = 10,500,000

Single amount presented in the statement of profit or loss for discontinued operations: 28,000,000 - 10,500,000 = 17,500,000 (net post-tax profit)

Sources & citations

  1. [S1]IFRS 5 Non-current Assets Held for Sale and Discontinued Operations — IFRS Foundationaccessed 2026-07-18
  2. [S2]IFRS 5, Non-current Assets Held for Sale and Discontinued Operations — ACCA Globalaccessed 2026-07-18
  3. [S3]IFRS - Use of IFRS Standards by jurisdiction: Nigeria — IFRS Foundationaccessed 2026-07-18
  4. [S4]Highlights of the provisions relating to financial statements, audit and annual returns in CAMA 2020 — Dentons ACAS-Lawaccessed 2026-07-18
  5. [S5]Nigeria — Mergers & Acquisitions (Getting the Deal Through, 2017 edition) — Templarsaccessed 2026-07-18
  6. [S6]A Guide to Stamp Duties in Nigeria — PwC Nigeriaaccessed 2026-07-18
  7. [S_TAX1]Nigeria Tax Act, 2025 has been signed – highlights — EY Globalaccessed 2026-07-18
  8. [S_TAX2]Nigeria's 2025 Tax Reform Acts Explained: Key Changes — Baker Tilly Nigeriaaccessed 2026-07-18
Last reviewed 2026-07-18 · Reviewer: Rafiu Olawuyi, FCA