GROUP 2

Agenda
Depreciation and amortization, Changes to a
plan of sale, removal of an individual asset or
liability from a disposal group.

Assets in a disposal group, discontinued

operations, presentation in the financial
statements.
Depreciation
● Applies only to physical assets
● Philosophically reduces an asset's value
● Has many different methods a company
may choose from
● May result in accelerated, inconsistent
amounts recorded each year
● May incorporate salvage value when
determining depreciation base
● Always uses contra assets
Amortization
● Applies only to intangible assets
● Philosophically spreads an asset's
cost
● Generally is only done using the
straight-line method
● Often results in the same amount
recorded each year
● Does not incorporate salvage value
when determining amortization base
● May not always use contra assets
 Depreciation Methods

● Straight-Line Method: A company depreciates the asset equally over

the term of its useful life.
● Declining Balance: A company depreciates an accelerated amount of
depreciation earlier in the asset's useful life.
● Double Declining Balance Method: A company depreciates an
accelerated amount of depreciation earlier in the asset's useful life by
doubling the rate under the straight-line method.
● Sum-of-the-Years' Digits Method: The digits of the asset's useful life
are summed. Then, a company depreciates a proportion of costs
based on the corresponding digit
● Units of Production: A company assesses a baseline of anticipated
usage.
 Changes to a plan of sale
● A non-current asset that ceases to be classified as held for sale shall
be measured at the lower of the asset’s:

1.Carrying amount before it was classified as held for sale, adjusted

for any depreciation, amortization or revaluation that would have been
recognized had the asset not been classified as held for sale, and

2.Recoverable amount at the date of subsequent decision not to sell.

 Removal of an individual asset or
liability from a disposal group.
● The remaining assets and liabilities from a disposal group to be sold shall
continue to be measured as a group, only if the group meets the relevant
criteria to be classified as held for sale.
● the remaining non-current assets, shall be measured at the lower of their
carrying amounts and fair values less costs to sell at that date.
● Any non-current assets that do not meet the criteria shall cease to be
classified as held for sale.
Assets in a disposal group
● A disposal group is a group of assets to be disposed
of, by sale or otherwise, together as a group in a
single transaction
 Discontinued operations
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 plan to dispose it of, or
● Is a subsidiary acquire exclusively with a view to resale.
 Presentation of Disposal group
classified as held for sale
● We shall present a non-current asset classified as held for sale and
the assets of a disposal group classified as held for sale separately
from other assets in the statement of financial position.
● The liabilities of a disposal group shall be presented separately
from other liabilities in the statement of financial position.
● Those assets and liabilities shall not be offset and presented as a
single amount.
Presenting discontinued
operations
we shall disclose:
a. a single amount in the statement of financial
comprehensive income comprising the total of:
(i) the post-tas profit or loss of discontinued operations
and:
(ii) the post-tax gain or loss recognized on the
measurement to fair value less costs to sell.
b. an analysis of the single amount in into:
(i) the revenue, expenses and pre-tax profit or loss of
discontinued operations;
(ii) the related income tax expense
(iii) the gain or loss recognized on the measurement to fair
value less costs to sell and;
(iv) the related income tax expense

c. the net cash flows attributable to the operating, investing and

financing activities and discontinued operations.

d. the amount of income from continuing operations and from

discontinued operations attributable to owners of the parent.
Thank you