In accordance with the "Basic Standards of Accounting Standards for Business Enterprises," the Ministry of Finance issued Accounting Standard No. 42 on 4/28/2017, effective as of 5/28/2017.
1. Classification of Assets Held for Sale
A non-current asset or disposal group should be classified as held for sale if the enterprise primarily intends to recover its carrying amount through sale rather than through continued use.
Splitting Criteria
- • Consistent with the practice of selling such assets or disposal groups in similar transactions, it must be immediately available for sale in its current condition.
- • Sale is highly probable: the enterprise has resolved to sell and obtained a firm purchase commitment, with completion expected within one year.
II. Measurement of Assets Held for Sale
Initial Measurement
If the carrying amount exceeds the fair value less costs to sell, reduce the carrying amount to that net amount and recognize the difference as an impairment loss.
Subsequent Measurement
Non-current assets held for sale shall not be depreciated or amortized. If the net amount (fair value less costs to sell) subsequently increases, any previously recognized impairment loss shall be reversed.
III. Discontinued Operations
Discontinued operations refer to a component that can be distinguished separately and meets at least one of the following criteria: it has been disposed of or is classified as held for sale.
- • This component represents a separate major business or a distinct major operating region.
- • This component is part of a coordinated plan to dispose of an independent major business or a separate major operating region.
- • This subsidiary was acquired specifically for resale.
Regulatory Document Attachment
Accounting Standards for Business Enterprises No. 42 — Non-current Assets Held for Sale, Disposal Groups and Discontinued Operations (PDF)