International Financial Reporting Standard 5

Introduction

The IFRS5 accounting standard sets out accounting practices for assets held for sale, how to report discontinued operations in the financial statements, and related supplementary information. In particular, it establishes the following standards for this type of asset:

1. They must be valued at either the book value or the fair value net of the cost of sale, whichever is lower, and that the depreciation on such assets ceases.
2. They must be stated separately in the balance sheet, and the results of discontinued operating activities must be stated separately in the Profit and Loss account.

The accounting journals needed to satisfy point 1 represent adjustments to the book value or write off value of the depreciation journals originating from the financial statements and are managed by the consolidator manually. Those journals fall within the scope of the consolidator’s ordinary manual insertion activity.

CCH Tagetik automatically manages the generation of the reclassification journals needed to satisfy point 2.

Data model setup

For the purposes of IFRS5, it is necessary to run the following setup on CCH Tagetik’s data model:

• Compile the list of accounts for reclassification.
• Compile the list of variation/detail type with the one dedicated to IFRS5.
• Generate the variation accounts in the relative control groups.
• Compile the list of categories with the one dedicated to IFRS5.
• Set up the IFRS5 rules.
• Activate IFRS5 data processing in the Process.

The specific attributes for managing IFRS5 for each affected dimension are detailed below.

For more details on the Data Model, see .

Preparation of the Account dimension

For reclassification for IFRS5 purposes, in addition to preparing the loading variation accounts from the financial statement accounts, the assets/liabilities/results of the entities held for sale or deriving from discontinued operations are required to be stated separately.

For example, an entity must present a non-current asset classified as held for sale and the assets of a disposal group classified as held for sale separately from the other assets on the balance sheet. The liabilities of a disposal group classified as held for sale must be presented separately from the other assets on the balance sheet.

The entity must indicate a single amount to state in the Profit and Loss, represented by the total net result deriving from discontinued operations.

To do this, it is necessary to create new normal accounts in the list of accounts. Depending on the financial statement policies, the net result P&L account may or may not be reclassified: if reclassified, it is necessary to create a specific reclassification account.

Preparation of the Variation/Detail types dimension

To manage the balance sheet adjustment variations in the reclassification journals, it is necessary to define at least one variation/detail type which manages the IFRS5 event. This variation/detail type is used to create or update the variation accounts in control groups.

In the control groups definition page (), the field in the definition window and the Control groups deployment window indicates whether the child account should be used to allocate the IFRS5 data processing reclassification amounts for the control group.

The variation/detail type attribute to be set is IFRS5 in the Control group data section, and can have the following values:

Value	Description
No	(Default value) the account is not used to allocate amounts related to IFRS5 events.
Entrance/Exit	The account is used to indiscriminately allocate the amounts due to incoming IFRS5 reclassification.
Entrance	The account is used to allocate the amounts due to incoming (revocation) IFRS5 reclassification.
Exit	The account is used to allocate the amounts due to outgoing (sale approval) IFRS5 reclassification.
IC eliminations write off	The account is used by the system to write off the initial balance variation of any IC journals that have been carried forward but are to be written off.

The same attribute can alternatively be set manually to the child account or accounts of a control group.

IFRS5 events

IFRS5 management is done by event. This means that whenever a change in IFRS5 management takes place, it is necessary to create a new event to register it. IFRS5 events are managed by process.