What is Assets Held for Sale?
Assets held for sale are non-current assets, or disposal groups, that a business intends to recover their carrying amount primarily through a sale transaction rather than through continued use. They are presented separately on the balance sheet under IFRS 5.
How It Works
- Confirm management has committed to a plan to sell the asset.
- Check that the asset is available for immediate sale in its present condition.
- Verify the sale is highly probable within one year.
- Reclassify the asset out of property, plant and equipment.
- Measure it at the lower of carrying amount and fair value less costs to sell, and stop depreciation.
Saudi Context
Saudi listed companies on Tadawul must disclose held-for-sale assets distinctly under SOCPA-adopted IFRS. ZATCA treats the eventual gain or loss on sale as part of taxable income or the zakat base depending on the taxpayer’s profile.
Example
A retailer decides in March to sell a warehouse with a carrying value of SAR 3,000,000. Its fair value less selling costs is SAR 2,800,000. The asset is reclassified as held for sale and impaired by SAR 200,000, with depreciation suspended.