AASB 5 - Non-current Assets Held for Sale and Discontinued Operations - August 2015

AASB 5 is organised around a small set of interlocking concepts that determine classification, measurement, presentation and disclosure for assets and disposal groups intended for sale or distribution. The main concepts are: held for sale vs held for distribution; disposal group; highly probable and availability; measurement at lower of carrying amount and fair value less costs to sell/distribute; cessation of depreciation; impairment accounting and allocation; discontinued operations; and presentation and disclosure. These concepts are defined and operationalised across the Standard and appendices.

Held for sale and held for distribution to owners

• An asset or disposal group is held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use (paragraph 6). For distributions to owners, paragraph 5A and paragraph 12A extend the classification and measurement rules to assets held for distribution, where measurement is at the lower of carrying amount and fair value less costs to distribute (paragraph 15A).
• Availability and the “highly probable” requirement are central. The asset must be available for immediate sale in its present condition and the sale must be highly probable (paragraph 7). The “highly probable” concept requires that management is committed to the plan, that an active programme to find a buyer has commenced, that the asset is actively marketed at a reasonable price, and that the sale is expected to qualify as completed within one year from classification unless exceptions under paragraph 9 apply (paragraph 8). Shareholder approval probability, if required, must be considered as part of the “highly probable” assessment (paragraph 8).

Disposal group

• Disposal groups are groups of assets to be disposed of together in a single transaction and the liabilities directly associated that will be transferred (Appendix A definition and paragraph 4). The Standard requires that if a non-current asset within scope is part of a disposal group, the measurement requirements apply to the group as a whole (paragraph 4). On remeasurement, assets and liabilities within the group that are not themselves within the measurement scope must be remeasured under their applicable Standards before the disposal group’s fair value less costs to sell is remeasured (paragraph 19).

Measurement rules and exceptions

• Measurement is at the lower of carrying amount and fair value less costs to sell (paragraph 15). For distributions to owners, replace “costs to sell” with “costs to distribute” (paragraph 15A). The measurement provisions do not apply to certain categories of assets which remain subject to other Standards, specifically those listed in paragraph 5 (deferred tax assets, employee benefit assets, financial assets within AASB 9, investment property under fair value model, agriculture measured at fair value less costs to sell, insurance contract groups), and Aus5.1 adds a public sector point about contractual rights under insurance contracts.
• Costs to sell expected to be incurred beyond one year must be measured at present value and the increase due to the passage of time is recognised in profit or loss as a financing cost (paragraph 17). This creates a present-value modelling requirement when the sale is likely to complete beyond one year.

Impairment and reversal

• An initial or subsequent write-down to fair value less costs to sell is an impairment loss (paragraph 20). Subsequent increases are recognised only up to the cumulative impairment previously recognised (paragraph 21 for single assets; paragraph 22 for disposal groups), and the impairment/gain recognised for a disposal group must be allocated to the non-current assets within the group that are within AASB 5’s measurement scope following the allocation order set out in AASB 136 (paragraph 23).

Depreciation and ongoing expenses

• Depreciation and amortisation cease for non-current assets when classified as held for sale, or while part of a disposal group classified as held for sale (paragraph 25). Interest and other expenses attributable to disposal group liabilities continue to be recognised (paragraph 25).

Discontinued operations and presentation

• A discontinued operation is a clearly distinguishable component disposed of or classified as held for sale that represents a separate major line of business or geographical area of operations, or 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 (paragraph 32).
• The Standard requires a single amount in the statement of comprehensive income comprising the post-tax profit or loss of discontinued operations and the post-tax gain or loss on measurement to fair value less costs to sell or disposal; it also requires an analysis into revenue, expenses, pre-tax profit or loss, related income tax expense and cash flow information, either in the notes or in the statement itself (paragraphs 33-33A, 34). Prior periods are to be re-presented so disclosures relate to all operations discontinued by the end of the reporting period for the latest period presented (paragraph 34).

Cross-references and interactions

• AASB 5 deliberately interoperates with other Standards for particular measurement, derecognition and disclosure rules: AASB 116 (property, plant and equipment) for derecognition and revaluation treatment (paragraph 24); AASB 138 (intangible assets) for derecognition (paragraph 24); AASB 136 (impairment of assets) for allocation order and recoverable amount determinations where relevant (paragraph 23 and Appendix A note on recoverable amount); AASB 112 for income tax disclosures in discontinued operations (paragraph 33b(ii), (iv)); AASB 8 for reportable segment disclosure (paragraph 41(d)); and AASB 101 for general presentation requirements (paragraph 5B). Appendix B provides further guidance on permitted extensions of the one-year period where delays are beyond the entity’s control (Appendix B, B1).

Australian-specific and tiered application

• The Standard includes Australian-specific paragraphs addressing public sector circumstances (Aus2.1-Aus2.4), an Aus5.1 public-sector point about insurance contracts, and an Appendix D that provides simplified disclosures for Tier 2 entities (AusD1) which exempts certain paragraphs from application. The Comparison with IFRS 5 confirms that for-profit entities complying with AASB 5 will also comply with IFRS 5.

These concepts determine the accounting treatment, the timing of measurement and presentation changes, the stop or start of depreciation recognition, and the detailed note disclosures that entities must provide. The Standard places several judgement points on management (the “highly probable” threshold, marketing evidence, pricing reasonable in relation to fair value, present-value calculations of costs to sell, allocation of impairment/gain within disposal groups), and it prescribes specific mechanics for reclassification, reversal and restatement that preparers must follow (paragraphs 6-12, 15-19, 20-29, 33-42).

AASB 5 affects any entity that recognises non-current assets, and in particular entities that plan to sell, dispose of or distribute significant assets or operations. The Standard is written for all recognised non-current assets and disposal groups subject to its measurement and presentation requirements (paragraph 2). The principal affected parties are preparers of general purpose financial statements, auditors, boards and management, private equity investors and buyers and sellers in asset transactions, and public sector entities where Aus paragraphs apply.

Entity classes and tiers

• For-profit entities: The Standard notes that for-profit entities complying with AASB 5 also comply with IFRS 5 (Comparison with IFRS 5). Those entities must apply the measurement, presentation and disclosure requirements to non-current assets and disposal groups that meet the criteria set out in paragraphs 6-12 and 15-19. For a newly acquired subsidiary acquired exclusively with a view to resale, unique rules apply for classification and disclosure (paragraphs 11, 39).
• Not-for-profit entities and public sector: The Standard contains “Aus” paragraphs that either provide additional guidance or carve-outs for public sector and not-for-profit contexts. For example, Aus2.1 excludes restructuring of administrative arrangements and administered activities of government departments from the scope of the Standard. Aus2.3 clarifies that an administered activity of a government department does not give rise to income and expenses of the department and therefore, from that department’s perspective, discontinuance does not give rise to a discontinued operation; however, from the government’s perspective it may (Aus2.3). Aus5.1 clarifies public sector treatment of contractual rights under insurance contracts (Aus5.1).
• Tier 2 (simplified disclosures) entities: Appendix D and AusD1 set out that entities using AASB 1060 simplified disclosures are exempt from paragraphs 30, 33, 35, 36A, 41 and 42. That means Tier 2 entities using the simplified framework are not required to apply some of the presentation and disclosure rules that apply to other entities, reducing their compliance burden in specified areas (AusD1).

Parts of the Standard that create specific burdens or decision points for certain actors:

• Management and boards: Management must be “committed to a plan to sell” and must initiate an active programme to find a buyer for the asset to qualify as held for sale; management must also provide evidence that the sale is being actively marketed at a price reasonable in relation to current fair value and consider the probability of shareholder approval where relevant (paragraph 8). These are governance-level assertions that boards and audit committees will need to document and support.
• Preparers and finance teams: Preparers must perform fair value measurements and estimates of costs to sell or distribute, sometimes at present value where sales are expected beyond a year (paragraph 17). They must classify disposal groups, remeasure assets that are not within AASB 5 measurement scope before group measurement (paragraph 19), allocate impairment and gains to assets within a disposal group following AASB 136 (paragraph 23), stop depreciation for classified assets (paragraph 25), and satisfy the Standard’s note disclosure requirements (paragraph 41). These activities increase valuation, documentation and disclosure workloads.
• Auditors: Auditors will need to verify management’s judgement that the sale was “highly probable”, evidence of active marketing and pricing, fair value less costs to sell calculations, present value of costs to sell where applicable, and allocation and impairment reversals. The Standard’s cross-references to AASB 13, AASB 136 and AASB 116 mean auditors must also apply those Standards’ measurement and allocation rules when assessing compliance (paragraph 18, 19, 23).
• Buyers and sellers and transaction advisers: Parties engaged in asset sales need to be aware that recognition in the seller’s financial statements may switch from continuing-use accounting to held-for-sale accounting, which changes carrying values and stops depreciation; this can affect transaction pricing, timing and negotiations (paragraphs 15, 25).
• Lenders and covenant monitors: The Standard requires separate presentation of discontinued operations and held-for-sale assets, and cessation of depreciation for those assets; those presentation and measurement changes may affect ratios and covenant calculations, so lenders and covenant administrators are affected by how management applies the Standard (paragraphs 25, 33, 38).

Public sector specifics

• Aus2.1 to Aus2.4 carve out certain public sector restructurings and administered activities from the Standard’s requirements, and instruct entities to look to other Standards such as AASB 1004 Contributions and AASB 1050 Administered Items for treatment of assets resulting from restructuring and administered activities (Aus2.1-Aus2.4). Where a government discontinues an activity that had been reported as administered by a department, the discontinuance may constitute a discontinued operation from the government’s point of view (Aus2.3). Local governments transferring assets as part of restructurings may produce discontinued operations for the transferor, with cross-reference to AASB 3 where relevant (Aus2.4).

Transitional and effective date implications

• Entities must apply AASB 5 for annual periods beginning on or after 1 January 2018 (paragraph 44), but the compiled version includes amendments effective for annual periods beginning on or after 1 January 2023 (Compilation details). The Standard allows entities to apply it earlier in some limited windows (paragraph 44; compilation table), so entities considering early adoption must reconcile AASB 5 application to the timing of AASB 9, AASB 17 and other referenced Standards where the compilation notes require co-application (Compilation details and footnotes).

In sum, the Standard applies broadly to entities with non-current assets that may be disposed of or distributed, but different entity classes face different discrete obligations and potential exemptions that reduce or shift the compliance work. The Standard imposes a mix of valuation, judgement, disclosure and presentation tasks that affect preparers, auditors, boards, transaction counterparties and users of financial statements.

AASB 5 imposes specific duties on management and preparers, sets out rights implicitly granted to users via disclosure, and defines boundaries where other Standards govern treatment. The Standard is prescriptive about classification, measurement, presentation and required disclosures; it also delegates certain measurement and allocation mechanics to other Standards. Key duties and consequential operational rights under the Standard are set out below with the supporting paragraph references.

Duties on management and preparers

• Determine classification: Management must assess whether an asset or disposal group meets the held-for-sale or held-for-distribution criteria. The duty is to ensure the asset is available for immediate sale in its present condition and the sale is highly probable, which requires commitment at the appropriate level of management, initiation of an active programme to locate a buyer, active marketing at a price reasonable relative to fair value, and expectation of completion within one year unless paragraph 9 applies (paragraphs 6-8, 11, 12). Management must also consider the probability of shareholder approval where required (paragraph 8).
• Document the one-year expectation and exceptions: When the sale is expected to occur beyond one year due to events beyond the entity’s control, management must document that an extension is justified under paragraph 9 and Appendix B conditions, and meet the evidence tests set out in Appendix B (Appendix B, B1).
• Measure at lower of carrying amount and fair value less costs to sell/distribute: The preparer must calculate fair value less costs to sell (or distribute) and compare it with carrying amount, applying present value to costs to sell where the sale completes beyond one year (paragraphs 15, 15A, 17).
• Cease depreciation: The entity must stop depreciating or amortising assets once classified as held for sale or part of a disposal group classified as held for sale (paragraph 25).
• Recognise impairments and reversals appropriately: The preparer must recognise initial and subsequent write-downs as impairment losses and subsequent increases only up to previously recognised cumulative impairment losses, with specific allocation rules for disposal groups per AASB 136 (paragraphs 20-23).
• Present and disclose: The entity must present assets and liabilities of disposal groups held for sale separately on the statement of financial position (paragraph 38), present discontinued operations separately in the statement of comprehensive income, disclose the single amount for discontinued operations and the supporting analysis, disclose net cash flows attributable to discontinued operations, and provide the notes required by paragraph 41 (paragraphs 30-33, 41).
• Reclassify and measure if plans change: If criteria for held-for-sale/distribution cease to be met, the entity must cease that classification and measure the asset or disposal group at the lower of its carrying amount before classification adjusted for depreciation and its recoverable amount, and include adjustments in profit or loss from continuing operations in the period the criteria are no longer met (paragraphs 26-29). Where this affects subsidiaries, joint ventures or associates, financial statements for prior periods must be amended accordingly (paragraph 28).

Documentation and evidentiary duties

• The Standard requires evidence of active marketing and the reasonable price relative to fair value (paragraph 8), a management commitment to the plan, and documentation supporting why an extension beyond one year is permitted (Appendix B). Where criteria are met after the reporting period but before authorisation of the financial statements for issue, certain disclosures are required in the notes (paragraph 12).

Interaction duties: apply other Standards where instructed

• Prepare to apply and cross‑reference AASB 116, AASB 138, AASB 136, AASB 13, AASB 112 and AASB 8 for particular measurement, derecognition, allocation and disclosure requirements (paragraphs 18, 19, 23, 24, 33b, 41d, Appendix A definitions). For example, derecognition of property, plant and equipment following sale must follow AASB 116 paragraphs 67-72 (paragraph 24).

Rights of users and implied protections

• Users of financial statements receive specific information designed to permit evaluation of the financial effects of disposals and discontinued operations: the Standard requires a single amount for discontinued operations and an analysis (paragraph 33), presentation of held-for-sale assets separately on the statement of financial position (paragraph 38), and specific notes about the asset or disposal group and the sale circumstances (paragraph 41). These disclosures are rights that users can expect the preparer to provide.
• Users are entitled to re-presentation of prior periods so that disclosures relate to all operations discontinued by the end of the reporting period (paragraph 34), which aids comparability across periods.

Delegations and allowances

• Management has discretion in matters of judgement: assessing “highly probable”, determining whether active marketing is taking place at a price reasonable in relation to fair value, and deciding whether circumstances justify an extension of the one-year period (paragraphs 7-9, Appendix B). These are judgement calls that carry compliance and audit scrutiny.
• Tier 2 entities using simplified disclosures have an allowance from certain disclosure duties: paragraph AusD1 removes the obligation to apply some presentation and disclosure paragraphs (paragraphs 30, 33, 35, 36A, 41, 42), reducing the preparer’s duties in those areas.

Compliance and restatement duties

• If an entity removes an individual asset or liability from a disposal group, the preparer must determine whether the remaining group still meets held-for-sale criteria; if not, remaining assets that individually meet the criteria are measured individually and assets that no longer meet criteria cease to be classified as held for sale (paragraph 29). This creates a duty to review composition and remeasure accordingly.
• The entity must reclassify and measure assets appropriately when plans change, and in some circumstances amend earlier financial statements for prior periods presented (paragraph 28).

Procedural rights and timing

• The Standard permits entities to elect earlier application under certain windows (paragraphs 43-44 and Compilation details), which is a right to accelerate adoption subject to the other Standards’ co-application constraints.

In short, AASB 5 creates binding duties on classification, measurement, cessation of depreciation, impairment recognition and disclosure, while granting preparers judgement-based discretions that must be documented and supported. It also grants users specific disclosure rights and prescribes where other Standards must be consulted for particular technical mechanics.

AASB 5 is an Accounting Standard made by the Australian Accounting Standards Board under section 334 of the Corporations Act 2001 (see front matter, “The Australian Accounting Standards Board made Accounting Standard AASB 5 ... under section 334 of the Corporations Act 2001 on 7 August 2015”). As an Accounting Standard, its direct legal enforcement and penalty mechanisms are embedded in the broader regulatory framework that gives legal force to Australian Accounting Standards (principally the Corporations Act and associated regulatory instruments). The Standard itself does not specify pecuniary penalties or criminal sanctions; it sets accounting obligations that entities must follow when preparing financial reports that are required by the Corporations Act. The specific enforcement mechanisms and consequences stem from that broader statutory and regulatory framework rather than from AASB 5’s text.

Regulatory and external enforcement pathways

• Statutory compliance: Entities incorporated under the Corporations Act that are required to prepare financial reports for members and regulators must prepare those reports in accordance with Australian Accounting Standards, including AASB 5 where applicable. Non-compliance with mandatory accounting standards in financial reports can give rise to regulatory action under the Corporations Act, including directions by ASIC, remedial orders, and (in more serious incidents) civil or criminal proceedings for misleading or deceptive conduct, false statements in financial reports, or related offences under the Corporations Act. Those enforcement routes are outside the Standard text but are the practical enforcement mechanisms in the Australian regime; the Standard itself does not set penalty amounts or processes.
• Audit and assurance: Independent auditors enforce the Standard de facto through the audit process. Auditors assess whether financial statements comply with applicable Accounting Standards; failure to comply can result in a modified audit opinion and professional sanctions for auditors if due professional care is not exercised. The Standard sets obligations that auditors will evaluate (classification evidence, fair value less costs to sell calculations, stopping depreciation, disclosures). Again, the Standard does not create the audit enforcement mechanism, but auditors are an enforcement channel.
• Market enforcement: Investors, lenders and other financial statement users can apply market pressure. The Standard prescribes disclosures and presentation that, if omitted or misstated, can lead to reputational damage, litigation for misleading statements in some contexts, or covenant breaches for borrowers. The Standard’s requirement to present discontinued operations separately (paragraph 33) and to provide specific notes (paragraph 41) increases the information available to market stakeholders.

Areas likely to attract scrutiny and enforcement focus

• Judgement-intensive determinations: The “highly probable” classification (paragraphs 7-8), the assertion that an asset is available for immediate sale in its present condition (paragraph 7), and the evidence required when the sale will complete beyond one year (paragraph 9 and Appendix B) are judgement areas that auditors and regulators will scrutinise.
• Valuation and present value calculations: Fair value less costs to sell (paragraph 15), present-value measurement of costs to sell when sales extend beyond a year (paragraph 17), and allocation of impairment/gains across disposal group assets per AASB 136 (paragraph 23) are technical areas where incorrect application can lead to material misstatement.
• Disclosures and re-presentation: The Standard requires a single amount for discontinued operations and a supporting analysis (paragraph 33), note disclosures when assets are classified as held for sale or sold (paragraph 41), and re-presentation of prior periods (paragraph 34). Omission or misleading presentation may attract regulatory or civil consequences where financial reports are relied upon by users.

Transitional non-compliance and retrospective issues

• The Standard prescribes prospective application to assets and operations that meet criteria after the effective date, though an entity may apply the rules earlier with valuation information available at the original classification date (paragraph 43). Application errors in transitional periods can lead to restatement requirements; paragraph 28 specifically requires amendment of financial statements for prior periods in certain circumstances involving subsidiaries and other entities.

In short, AASB 5 itself does not list penalties; enforcement occurs through the statutory and regulatory apparatus that requires compliance with the Accounting Standards, through audit assurance mechanisms, and through market and contractual consequences when financial statements do not comply. The Standard highlights several judgemental and technical areas where enforcement attention is likely to focus: classification criteria, valuation and present-value calculations, allocation of impairment/gains, cessation of depreciation, and completeness of disclosures (paragraphs 6-19, 20-29, 33-41).

AASB 5 operates within the architecture of Australian Accounting Standards and the Corporations Act 2001 regime. The Standard contains explicit cross-references to other accounting Standards and to the statutory mechanism that gives the Standard legal effect. Its interactions are mostly with other AASB Standards and with public-sector accounting rules; it does not itself purport to interact with non-accounting statutes beyond the Corporations Act references in the compilation preface.

Key statutory and standards interactions

• Corporations Act 2001: AASB 5 was made under section 334 of the Corporations Act 2001 (Accounting Standard AASB 5 ... made under section 334 of the Corporations Act 2001, dated 7 August 2015). The Corporations Act gives the Australian Accounting Standards Board authority to issue Accounting Standards and mandates that certain entities prepare financial reports in conformity with those Standards. Thus legal force and compliance obligations flow from that statutory framework, though the Standard itself does not restate Corporations Act penalties or procedures.
• AASB Standards and Interpretations: AASB 5 cross-references and requires application of multiple other accounting Standards for particular measurement, derecognition and disclosure elements:
  • AASB 116 Property, Plant and Equipment: derecognition requirements for property, plant and equipment are referenced for gains or losses on sale that are not recognised earlier (paragraph 24).
  • AASB 138 Intangible Assets: derecognition requirements for intangible assets are referenced similarly (paragraph 24).
  • AASB 136 Impairment of Assets: allocation order for impairment losses and reversals for disposal group assets is determined by AASB 136 paragraphs referenced in paragraph 23; recoverable amount concepts and cash-generating unit rules in AASB 136 apply where noted (Appendix A footnote on recoverable amount).
  • AASB 13 Fair Value Measurement: the definition of fair value and fair value measurement guidance are referenced (Appendix A fair value definition and Compilation notes that IFRS 13 amended definitions).
  • AASB 112 Income Taxes: income tax disclosures related to discontinued operations are required in accordance with paragraph 81(h) of AASB 112 (paragraph 33b(ii), (iv)).
  • AASB 8 Operating Segments: reportable segment disclosure for assets or disposal groups must follow AASB 8 if applicable (paragraph 41(d)).
  • AASB 101 Presentation of Financial Statements: general presentation obligations and potential additional disclosures (paragraph 5B, paragraph 30 referencing AASB 101 paragraphs 15 and 125).
  • AASB 9 Financial Instruments and AASB 17 Insurance Contracts: paragraph 5 lists categories of assets outside AASB 5’s measurement scope, directing preparers to apply these Standards instead; Aus5.1 specifically discusses public sector contractual rights under insurance contracts.

Public sector law and administrative accounting

• The Standard contains Australian-specific paragraphs for public sector entities and for administered activities (Aus2.1-Aus2.4, Aus5.1). These paragraphs direct entities to other AASB pronouncements,AASB 1004 Contributions and AASB 1050 Administered Items,for treatment and disclosure of assets and liabilities resulting from restructuring of administrative arrangements, and clarify whether an administered activity constitutes a discontinued operation from the reporting entity’s perspective (Aus2.1-Aus2.4). This creates an intersection between AASB 5 and public sector accounting rules rather than a direct interaction with public administration statutes. The Standard further clarifies that contractual rights under insurance contracts for public sector entities are outside AASB 5’s measurement provisions (Aus5.1).

Interpretive and implementation interactions

• The Standard’s cross-references mean that changes in the other Standards will affect how AASB 5 operates. For example, amendments to AASB 13 that modify the definition of fair value and recoverable amount affect AASB 5’s measurement boundaries (Compilation notes and deleted IFRS text discussion). The compilation table and Table of Standards in the compilation details list specific Standards and amending Standards that have modified particular paragraphs of AASB 5 (for example, AASB 17 amended paragraph 5; AASB 1060 replaced Appendix D; AASB 2022-8 added Aus5.1). Entities must track the effective dates and interdependencies when adopting or applying AASB 5 and related Standards.

Disclosure and securities law

• While AASB 5 itself does not reference the Corporations Act disclosure provisions beyond noting the Standard was made under section 334, the Standard’s requirements for presentation and note disclosure feed into statutory financial reports used by investors and regulators. In practice, the Standard’s requirements for separate presentation of discontinued operations and held-for-sale assets, and the required notes about impending sales or distributions (paragraphs 30-41), interact with disclosure expectations under securities laws and continuous disclosure regimes, because the financial statements form part of an entity’s public reporting package. The Standard does not set securities-law obligations; it defines the accounting content that may be material to securities disclosures.

Transitional and application interactions

• The Standard contains transitional provisions and application options that interact with the timing of other Standards. For instance, the compilation notes state that some amendments must be applied when an entity applies AASB 9 or AASB 17 (Compilation details and paragraph 44M). Entities electing earlier application must ensure co-application of related Standards where those Standards’ effective dates are tied together (Compilation details table notes).

In sum, AASB 5 is tightly integrated into the Australian accounting Standards architecture and into the statutory framework that gives Standards legal force. Its practical application requires co‑ordination with AASB 116, AASB 136, AASB 138, AASB 13, AASB 112, AASB 8, AASB 101 and sector-specific paragraphs and Standards. It also interfaces indirectly with statutory disclosure and regulatory obligations because its presentations and notes become part of the financial reports supplied to regulators, lenders and investors.

AASB 5 as compiled incorporates amendments made up to and including 15 December 2022, and the compilation details set out the sequence of relevant amendments and their effective dates. The Standard as published in August 2015, and later compilations, record specific amending Standards that altered paragraphs and added Australian-specific material.

Key amendment events and references in the compilation

• AASB 5 original issuance and statutory base: Accounting Standard AASB 5 Non-current Assets Held for Sale and Discontinued Operations was made on 7 August 2015 under the Corporations Act 2001 (Accounting Standard AASB 5 ... made under section 334 of the Corporations Act 2001 on 7 August 2015).
• Effective date and prospective application: The Standard required application for annual periods beginning on or after 1 January 2018, with encouragement for earlier application for periods beginning after 24 July 2014 but before 1 January 2018 (paragraph 44). The compiled version applies to annual periods beginning on or after 1 January 2023 but before 1 July 2026 and incorporates amendments up to 15 December 2022 (front matter and Compilation details).
• Table of Standards in compilation details: The compilation lists Standards that have amended AASB 5 and their relevant dates and effective dates:
  • AASB 5 (7 Aug 2015) , commencement 31 Dec 2017, effective date (beginning) 1 Jan 2018.
  • AASB 17 (19 Jul 2017) , commencement 31 Dec 2022, effective date (beginning) 1 Jan 2023; AASB 17 amended paragraph 5 (Compilation table: “Paragraph affected 5 amended by AASB 17”).
  • AASB 1060 (6 Mar 2020) , commencement 30 Jun 2021, effective date (beginning) 1 Jul 2021; AASB 1060 replaced Appendix D, per the compilation table.
  • AASB 2021-7 (20 Dec 2021) , commencement 31 Dec 2021, effective date (beginning) 1 Jan 2022; it amended Appendix A’s recoverable amount definition.
  • AASB 2022-8 (15 Dec 2022) , commencement 31 Dec 2022, effective date (beginning) 1 Jan 2023; it added Aus5.1 (Compilation table notes).
  • AASB 2022-9 (15 Dec 2022) , commencement 30 Jun 2026, effective date (beginning) 1 Jul 2026; its amendments are not compiled into this document, as noted.
• Specific textual amendments noted within the Standard:
  • Paragraph 5 was amended by AASB 17 (Compilation table and paragraph references).
  • Aus5.1 was added by AASB 2022-8 (Compilation table).
  • Paragraph 44M referencing AASB 17 was added (paragraph 44M).
  • Appendix A’s recoverable amount was amended by AASB 2021-7 (Compilation table).
  • Appendix D was replaced by AASB 1060 (Compilation table).
• Historical IFRS-related amendments and deletions: The compilation includes “Deleted IFRS 5 text” and a series of notes (44A-44I, 44J-44K etc) that record how IAS/IFRS amendments altered the text of IFRS 5 and how entities were required to respond. For example, IFRIC 17 (November 2008) added paragraphs 5A, 12A and 15A to IFRS 5; those were to be applied prospectively from 1 July 2009 (Deleted IFRS 5 text note 44D). The compilation preserves those historical references even where the AASB has made Australia-specific changes.
• Withdrawal and repeal: Aus45.2 states that this Standard repeals the July 2004 AASB 5 and provides that the repealed Standard continues to apply for periods ending before the start time of the new Standard as if the repeal had not occurred (Aus45.2). The compilation also notes deletion or repeal of some paragraphs in the deleted IFRS text section and cross-references amendments to IAS/IFRS over time.

Transitional amendment notes

• Paragraph 43 provides the Standard’s transitional rule: application is prospective to non-current assets and operations meeting the classification criteria after the effective date, but an entity may apply the requirements to assets that meet the criteria after any earlier date provided that valuations and other information needed were obtained at the original time of classification (paragraph 43).
• Paragraph 44L references AASB 2015-1, which amended paragraphs 26-29 and added paragraph 26A; those amendments were to be applied prospectively in accordance with AASB 108 to changes in method of disposal occurring in annual periods beginning on or after 1 January 2016 (paragraph 44L). This is an example of a specific retrospective/prospective application instruction tied to an amending Standard.

Practical amendment implications

• The compilation table identifies interdependencies between adoption of AASB 5 amendments and the adoption of other Standards, for example the requirement to apply amendments to paragraph 5 when applying AASB 17 and the amendments tied to the adoption of AASB 9 shown in paragraph 44K. Entities must co-ordinate application timing when adopting multiple Standards to ensure consistency and avoid partial application problems (Compilation details and footnotes).
• Appendix D was replaced by AASB 1060, reflecting changes to the Tier 2 simplified disclosure regime and therefore changing which entities are eligible for simplified disclosure exemptions under AASB 5 (Compilation table and AusD1).

In short, the amendment history recorded in the compilation spans the original 2015 Standard, subsequent AASB amending Standards notably AASB 17, AASB 1060, AASB 2021-7 and AASB 2022-8, and historical IAS/IFRS amendments. The compilation emphasises effective dates, transitional application choices and the need to co-ordinate application of related Standards.

The text of AASB 5 as provided does not cite or summarise any litigation or court decisions. It is an Accounting Standard; the compilation and appendices contain no named court judgments, enforcement cases, or litigation summaries. Accordingly, there is no litigation history recorded within this Standard text to summarise.

Absent direct case law in the text, the Standard identifies several points where disputes or litigation might be most likely to arise because of the judgements and measurements required; these are areas auditors, preparers, and counsel should expect to be contested if financial statement users challenge accounting positions. The Standard itself does not adjudicate disputes, but the following provisions show where accounting positions produce facts and judgements that, in practice, could give rise to external disagreement or litigation risk:

• Classification and the “highly probable” test (paragraphs 7-9): Determinations that an asset is “available for immediate sale in its present condition” and that a sale is “highly probable” are judgemental. Disagreements can arise around whether management commitment was at the appropriate level, whether active marketing at a reasonable price occurred, and whether shareholder approval probability was adequately considered where required (paragraphs 7-8). Appendix B lists situations that permit extension beyond one year; disputes could focus on whether delaying events were “beyond the entity’s control” and whether sufficient evidence of continued commitment exists (Appendix B, B1).
• Fair value less costs to sell and valuation methodology (paragraphs 15, 15A, 17): Calculating fair value less costs to sell, and present-valuing costs to sell when sales take more than a year, requires valuation inputs, discount rates, and estimates of transaction costs. These technical estimates are common grounds for challenge by auditors, regulators or transaction counterparties.
• Disposal group composition and allocation (paragraphs 4, 19, 23): When assets are included in disposal groups, preparers must remeasure assets and liabilities not within AASB 5’s measurement scope in accordance with other Standards before remeasuring the disposal group (paragraph 19). Allocation of impairment losses or subsequent gains across assets within a disposal group must follow the allocation order in AASB 136 (paragraph 23). Disputes can arise about which assets are within scope, their prior carrying amounts, and how impairment is allocated.
• Cessation and reversal of depreciation (paragraph 25) and measurement on cessation of held-for-sale classification (paragraphs 26-29): When an asset ceases to be classified as held for sale, preparers must measure it at the lower of its carrying amount before classification adjusted for depreciation that would have been recognised and its recoverable amount, and include any required adjustment in profit or loss from continuing operations (paragraph 27-28). These mechanics, and the need to amend financial statements for certain prior periods, create potential disagreement over retrospective adjustments and disclosure adequacy.
• Presentation and disclosure of discontinued operations (paragraphs 31-36, 41): The requirement to present a single discontinued operations amount and to analyse it (paragraph 33), re-present prior periods (paragraph 34), and disclose specific facts and timing (paragraph 41) can lead to disputes about completeness, timing and the grouping of operations as discontinued.

Because this Standard incorporates cross-references to AASB 116, AASB 136, AASB 138, AASB 13 and tax disclosures under AASB 112, disputes about AASB 5 application frequently involve interpretable parts of those other Standards (paragraphs 18, 19, 23, 24, 33b). The Standard itself does not include litigation examples or precedent. Practitioners should expect that real-world disputes would centre on the judgement points above and on the adequacy and documentation of management’s evidence supporting classification, valuation and disclosure choices.

AASB 5 contains several practical traps and areas where misapplication or omission is common unless preparers and auditors pay attention. The following points distil those pitfalls into concrete check points tied to the Standard’s paragraphs.

1. Mis-timing classification and the one-year rule

• The “highly probable” threshold requires sales to be expected to complete within one year from classification, except where paragraph 9 and Appendix B justify an extension. Preparers often misapply the one-year rule by classifying an asset as held for sale when the sale is not actually “highly probable”, or by failing to document events that justify extensions beyond one year. Check paragraphs 8-9 and Appendix B. Appendix B sets out the narrow circumstances where the one‑year rule can be extended (Appendix B, B1).

2. Inadequate marketing evidence and management commitment

• The Standard requires an active programme to locate a buyer and active marketing at a price reasonable in relation to current fair value (paragraph 8). Documented evidence of marketing efforts, pricing strategies and management commitment is necessary to support classification decisions to auditors and regulators.

3. Forgetting to stop depreciation and the continuing expense treatment

• Once an asset is classified as held for sale, depreciation and amortisation must cease (paragraph 25). Failure to stop depreciation is a mechanical error that distorts carrying amounts and profit or loss.

4. Present value of costs to sell beyond one year

• If the sale is expected beyond one year, costs to sell must be measured at present value and the unwinding of the discount is recorded as a financing cost (paragraph 17). Practitioners sometimes omit discounting or misclassify the unwinding. Inputs to present value calculations should be documented and consistent with the entity’s financing assumptions.

5. Measurement exceptions and scope traps

• Some assets within a disposal group may be outside AASB 5 measurement (paragraph 5 lists deferred tax assets, employee benefit assets, financial assets under AASB 9, investment property under fair value model, agriculture under AASB 141 and groups of insurance contracts under AASB 17). The disposal group must be measured as a whole, but assets outside AASB 5’s measurement scope must be measured in accordance with their applicable Standards before measuring the group (paragraphs 4 and 19). Mistakes occur when preparers ignore these exceptions and apply a one-size-fits-all lower-of measurement.

6. Misallocating impairment and gains within disposal groups

• Impairment losses and subsequent gains for disposal groups must be allocated to the non-current assets within the group that are within AASB 5’s measurement scope, following the order set out in AASB 136 (paragraph 23). Practitioners sometimes apply pro rata allocation or ignore previously recognised impairment, which can misstate asset carrying amounts.

7. Failing to reclassify or re-measure when plans change

• If criteria are no longer met, the entity must cease classification and remeasure the asset or disposal group at the lower of its carrying amount before classification adjusted for depreciation and its recoverable amount, and include adjustments in profit or loss from continuing operations (paragraphs 26-29). This can trigger retrospective amendments for certain prior periods when the disposal group was a subsidiary, joint venture, associate or portion of a joint arrangement (paragraph 28). Preparers often underestimate the need to restate prior period presentations and adjust prior financial statements.

8. Discontinuity with newly acquired subsidiaries

• When a newly acquired subsidiary is acquired exclusively with a view to resale, it is classified as held for sale on acquisition only if the one-year requirement is met and it is highly probable other criteria will be met within a short period (usually three months) (paragraph 11). Moreover, paragraph 39 exempts the disclosure of the major classes of assets and liabilities for such newly acquired subsidiaries. Misreading these special rules can lead to inappropriate disclosures or classifications.

9. Incorrect presentation of discontinued operations

• The Standard requires a single amount in the statement of comprehensive income for discontinued operations and a supporting analysis either in the notes or in the statement (paragraph 33). If items are incorrectly aggregated or disaggregated between continuing and discontinued operations, comparability and compliance issues arise. Also remember to re-present prior periods so that disclosures relate to all operations discontinued by the end of the latest reporting period (paragraph 34).

10. Tier 2 and public sector carve-outs overlooked

• Entities using Tier 2 simplified disclosures under AASB 1060 are exempt from several presentation and disclosure paragraphs (AusD1). Conversely, public sector entities must observe Aus2.1-Aus2.4 and Aus5.1; these carve-outs change application materially. Failure to check whether Aus paragraphs or Tier 2 exemptions apply can lead to unnecessary work or omitted disclosures.

11. Shareholder approval and governance constraints

• Where shareholder approval is required for a sale, management must consider the probability of obtaining that approval as part of the “highly probable” test (paragraph 8). Failure to include shareholder approval probability in the assessment can invalidate a “held for sale” conclusion.

12. Interdependencies with other Standards and transitional timing

• AASB 5 requires application of other Standards for derecognition, fair value, impairment and tax disclosures (paragraphs 18, 19, 23, 24, 33b). If the entity has not applied those Standards or has transitional issues, the interplay can produce inconsistency or require additional disclosures. Compilation notes flag co-application issues, for example with AASB 9 and AASB 17 (Compilation details and paragraph 44M).

13. Omission of required notes when classification occurs after reporting period

• If criteria are met after the reporting period but before authorisation of the financial statements for issue, the entity must disclose the information specified in paragraph 41(a), (b) and (d) in the notes (paragraph 12). This is a narrow but important requirement; omitting it produces non-compliance.

14. Treatment of assets to be abandoned

• Assets that are to be abandoned must not be classified as held for sale because their carrying amounts will be recovered through continuing use (paragraph 13). A temporary removal from use is not abandonment (paragraph 14). Misclassification here can distort impairment and presentation.

Concretely, the principal internal controls to avoid these gotchas are: contemporaneous documentation of the management commitment and marketing programme, robust valuation procedures including present-value calculations, explicit tracking of disposal-group composition and assets within and outside the AASB 5 measurement scope, stopping depreciation in the ledger when classification occurs, and a disclosure checklist tied to paragraph 41 and the discontinued operations rules (paragraphs 33, 38, 41). Audit-ready documentation on the “highly probable” assessment and any Appendix B justification for extensions beyond one year is essential for withstanding external scrutiny.

The following is a practical compliance checklist and procedures map that maps directly to the Standard’s paragraphs and appendices. It is designed for preparers, audit committees and advisers to operationalise AASB 5’s requirements and to document evidence for auditors and regulators.

1. Identify candidate assets and disposal groups (paragraphs 2, 4, 6)

• Periodically review the asset register and strategic plans to identify non-current assets or groups of assets that management intends to sell or distribute.
• For each candidate, determine whether the carrying amount will be recovered principally through sale rather than through continuing use (paragraph 6).
• If assets are being disposed of together in a single transaction, treat them as a disposal group and include directly associated liabilities (paragraph 4).

2. Test the “available for immediate sale” and “highly probable” criteria (paragraphs 7-9, 11, 12)

• Document the asset’s present condition and whether it is available for immediate sale subject only to customary terms (paragraph 7).
• Evidence management commitment at the appropriate level to the sale plan. Keep board minutes, executive approvals and delegation records that show the commitment (paragraph 8).
• Open and record an active programme to locate a buyer: list intended buyers, marketing channels, and dates of advertisements or solicitations (paragraph 8).
• Record active marketing at a price reasonable in relation to current fair value and document basis for price setting (paragraph 8).
• Ensure the sale is expected to complete within one year of classification. If delays are anticipated beyond one year, assess whether Appendix B conditions apply and document the event(s) beyond management control and evidence of continued commitment (paragraph 9 and Appendix B, B1).
• Where shareholder approval is required, document probability assessments and governance steps to obtain it (paragraph 8).

3. Classify and record the date of classification (paragraphs 8, 11, 26A)

• Note the classification date and, if newly acquired with a view to resale, confirm the one-year requirement and probability of meeting other criteria within three months (paragraph 11).
• If reclassifying directly between held for sale and held for distribution to owners or vice versa, apply paragraph 26A mechanics and keep the original classification date where required (paragraph 26A).

4. Measure at the lower of carrying amount and fair value less costs to sell/distribute (paragraphs 15, 15A, 16, 17)

• Prepare fair value estimates in accordance with AASB 13 and document valuation methodology, inputs and judgements (paragraph 15 and Appendix A).
• Estimate costs to sell (or costs to distribute for distributions to owners) and include only incremental costs directly attributable to disposal, excluding finance costs and income tax expense (paragraph 15 and Appendix A definition).
• If sale is expected beyond one year, discount costs to sell to present value and document discount rate; recognise any unwinding of discount as financing cost in profit or loss (paragraph 17).
• For newly acquired assets forming part of a business combination and classified as held for sale on acquisition, measure at fair value less costs to sell on initial recognition (paragraph 16).

5. Stop depreciation and recognise impairment adjustments (paragraphs 20-25)

• Update ledger rules to cease depreciation or amortisation for assets classified as held for sale or forming part of a disposal group classified as held for sale (paragraph 25).
• Recognise an impairment loss for any write-down to fair value less costs to sell that has not already been recognised under AASB 136 and record subsequent gains only up to cumulative impairment losses previously recognised (paragraphs 20-22).
• For disposal groups, allocate impairment or gains to non-current assets within AASB 5 measurement scope following AASB 136 allocation order (paragraph 23).

6. Re-measure assets within disposal groups not within AASB 5 scope (paragraph 19)

• Before remeasuring the disposal group as a whole, remeasure any assets and liabilities in the group that are outside AASB 5’s measurement scope in accordance with their applicable Standards (paragraph 19). For example, measure financial instruments under AASB 9 or investment property under AASB 140 as required (paragraph 5).

7. Prepare presentation and disclosure (paragraphs 30-41)

• Present non-current assets classified as held for sale and the assets of a disposal group classified as held for sale separately from other assets on the statement of financial position; present liabilities of a disposal group classified as held for sale separately from other liabilities (paragraph 38).
• Present a single amount in the statement of comprehensive income for discontinued operations comprising the post-tax profit or loss and the post-tax gain or loss on measurement to fair value less costs to sell or disposal; provide the required analysis into revenue, expenses, pre-tax profit or loss and related income tax (paragraph 33).
• Disclose net cash flows attributable to discontinued operations by operating, investing and financing activities (paragraph 33(c)).
• Provide the required notes in the period of classification or sale: description of the asset/disposal group, facts and circumstances of the sale and expected timing, gain or loss recognised, and reportable segment (paragraph 41). If the classification criteria are met after reporting period but before authorisation of financial statements for issue, disclose the information in paragraph 41(a), (b) and (d) (paragraph 12).
• Re-present prior periods so that disclosures relate to all operations discontinued by the end of the reporting period for the latest period presented (paragraph 34), and reclassify prior discontinued operations to continuing operations if classification ceases (paragraph 36).

8. Manage changes of plan and reclassification (paragraphs 26-29, 26A)

• If criteria cease to be met, cease the held-for-sale or held-for-distribution classification and remeasure the asset or disposal group at the lower of: (a) its carrying amount before classification, adjusted for depreciation or revaluation that would have been recognised had it not been classified, and (b) its recoverable amount at the date of the decision not to sell or distribute (paragraph 27).
• Include required adjustments in profit or loss from continuing operations in the period the criteria are no longer met and amend prior period financial statements where the disposal group was a subsidiary, joint operation, joint venture, associate, or portion of an interest in a joint venture or associate (paragraph 28).
• If reclassifying an asset directly from being held for sale to held for distribution to owners or vice versa treat the change as a continuation of the original plan and apply paragraph 26A rules (paragraph 26A).

9. Coordinate with auditors and maintain audit trail

• Maintain an audit file with management minutes, board approvals, marketing evidence, valuation reports, discount rate calculations, calculations of costs to sell/distribute, and the rationale for any Appendix B extension beyond one year (paragraphs 8, 17, Appendix B).
• Reconcile ledger depreciation stop/start records to classification dates and ensure impairment adjustments are traceable to valuation inputs and AASB 136 allocation logic (paragraphs 25, 23).

10. Check Tier 2 and public sector carve-outs

• If the entity is a Tier 2 entity applying AASB 1060, verify whether paragraph AusD1 exempts the entity from paragraphs 30, 33, 35, 36A, 41 and 42 and document the basis for relying on the exemption (AusD1).
• Public sector entities should check Aus2.1-Aus2.4 and Aus5.1 for scope and measurement differences, and consult AASB 1004 and AASB 1050 as directed (Aus2.1-Aus2.4, Aus5.1).

11. Monitor interrelated Standards and effective dates

• Keep an adoption calendar aligning AASB 5 application with AASB 9, AASB 13, AASB 116, AASB 136, AASB 138 and AASB 112, and ensure co-application requirements are met where the compilation notes tie adoption together (Compilation details and paragraph 44M).
• If adopting earlier than mandatory effective dates, disclose that earlier application as required (paragraph 44).

12. Implement policies and internal controls

• Adopt an internal policy for held-for-sale classification, including required documentation, valuation procedures, responsibilities and sign-offs. Implement ledger controls to automatically stop depreciation at classification and to ensure separate presentation lines for held-for-sale assets.
• Establish a disclosure checklist mapped to paragraph 41 and paragraph 33 for the annual report and interim financial statements.

13. Special procedures for newly acquired subsidiaries

• If a subsidiary is acquired exclusively with a view to resale and meets the criteria to be classified as held for sale on acquisition, measure and disclose according to paragraphs 11 and 39. Note the special disclosure exemption for major classes of assets for newly acquired subsidiaries classified as held for sale on acquisition (paragraph 11 and paragraph 39).

14. Train stakeholders and communicate with third parties

• Educate management, the board and audit committee about the judgement points, the need to document marketing and commitment evidence, and the impact on presentation and financial metrics. Liaise with lenders if covenant metrics may be affected by classification or discontinued operations presentation (paragraphs 25, 33, 38).

Following this checklist and mapping each step to the relevant paragraph(s) in AASB 5 will materially reduce the risk of non-compliance, provide the necessary audit trail for verification, and ensure the entity’s financial statements meet the Standard’s measurement, presentation and disclosure requirements.