Revenue – ifrs 15 handbook

Accounting for a non-current non-financial asset held for sale 
may result in a gain or loss on transfer of control because 
consideration may differ from fair value
IFRS 5
When the carrying amount of a non-current non-financial asset is expected to 
be recovered principally through a sale (rather than from continuing use), the 
asset is classified as held-for-sale if certain criteria are met.
The standard does not override the measurement and presentation guidance 
for non-current assets that are held for sale. Under this guidance, assets that 
are held for sale are measured at the lower of fair value less costs to sell and 
the carrying amount, which may differ from the expected transaction price 
as determined under the standard. If the sale or transfer includes variable 
consideration that is constrained under the standard, then the resulting 
transaction price that can be recognised could be less than the fair value. This 
could result in the recognition of a loss when control of the asset transfers 
to the counterparty, even though the carrying amount may be recoverable 
through subsequent adjustments to the transaction price. In these situations, 
an entity may consider providing an early warning disclosure about the potential 
consequences of these accounting requirements.
Applying transaction price guidance on measuring consideration 
received or receivable
IFRS 5
Under the standard, an entity applies the guidance on the transaction price, 
including variable consideration and the constraint. This may result in the 
consideration initially being measured at a lower amount, with a corresponding 
decrease in any gain – particularly if the constraint applies. In extreme 
cases, an entity may recognise a loss on disposal even when the fair value 
of the consideration exceeds the carrying amount of the item immediately 
before disposal.