Discounting of costs to sell

Learning objectives

• Calculate the discounting of costs to sell when the sale is expected to occur beyond one year (rate given in the case).L3, L4

Normative references

• IFRS 5 §17Sale expected to occur beyond one year: costs to sell are measured at their present value. Current requirement (EU text in force): any increase in that present value arising from the passage of time is presented in profit or loss as a financing cost. Future requirement (IFRS 18, 1 January 2027, earlier application permitted): the increase is classified within profit or loss under the IFRS 18 requirements for income and expenses arising from the remeasurement of an asset (or disposal group) held for sale.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• A disposal is expected beyond one year and the costs to sell will be paid at that time. Which treatment is consistent with IFRS 5 as currently in force, before IFRS 18 applies?L3
• Havrin classifies a site as held for sale, but the disposal and the payment of the costs to sell, estimated at {costs_to_sell}, are expected in {years} years. Case assumption: the discount rate is {discount_rate}% a year. Calculate the present value of the costs to sell, rounded to the euro.L4