IPSAS 44 answers two related questions. First, when does a non-current asset stop being “in use” and start being “for sale” — and what happens to its carrying amount and depreciation from that moment? Second, when an entity winds down a whole operation, how should the results of that operation be separated from continuing operations in the statement of financial performance? The first question is about held-for-sale assets and disposal groups; the second is about discontinued operations. The two ideas overlap but are not the same, and most of the confusion around this standard comes from treating them as identical.
1. What IPSAS 44 covers IPSAS 44.1
The objective of IPSAS 44 is to specify the accounting for assets held for sale, and the presentation and disclosure of discontinued operations. In particular, the Standard requires assets meeting the held-for-sale criteria to be measured at the lower of carrying amount and fair value less costs to sell (FVLCTS), with depreciation ceasing — and to be presented separately, with discontinued operations presented separately in the statement of financial performance. Five steps carry the whole standard:
1. Classify
As held for sale (or held for distribution to owners) once the criteria are met
2. Measure
At the lower of cost and fair value less costs to sell (FVLCTS)
3. Stop depreciation
Depreciation and amortisation cease once classified
4. Present separately
Held-for-sale assets and liabilities shown apart in the statement of financial position
5. Report apart
Discontinued operations reported separately in the statement of financial performance
Scope: two different reaches IPSAS 44.3–6
The classification and presentation requirements are broad; the measurement requirements carry specific carve-outs.
Classify & present — all of it
All recognised non-current assets, and all disposal groups, regardless of what they contain
Measurement excludes
Deferred tax assets · employee benefit assets (IPSAS 39) · financial instruments (IPSAS 41) · investment property at fair value (IPSAS 16) · agricultural assets at FVLCTS (IPSAS 27) · groups of insurance contracts
If a non-current asset within the measurement scope sits inside a disposal group, the whole group is measured at the lower of its carrying amount and FVLCTS — the excluded assets and liabilities are simply remeasured first, under their own applicable IPSAS. And everything this Standard says about “held for sale” applies equally to a non-current asset (or disposal group) held for distribution to owners — the classification, presentation, and measurement requirements are the same, with “distribute” substituted for “sell” IPSAS 44.7.
2. Key definitions IPSAS 44.9–10
| Term | Meaning |
|---|---|
| Held for sale | A non-current asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. |
| Held for distribution to owners | Classified when the entity is committed to distributing the asset (or disposal group) to its owners, acting in their capacity as owners — the asset must be available for immediate distribution and the distribution highly probable. |
| Disposal group | A group of assets to be disposed of together in a single transaction — by sale or otherwise — together with any directly associated liabilities that will transfer in the same transaction. |
| Discontinued operation | A component of an entity that has been disposed of, or is held for sale, and (a) represents a separate major operation or geographical area; (b) is part of a single coordinated plan to dispose of such an area; or (c) is a controlled entity acquired exclusively with a view to resale. |
| Component of an entity | Operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. |
| Non-current asset | An asset that does not meet the definition of a current asset — i.e. not expected to be realised, sold, or consumed within the normal operating cycle or within twelve months, and not held primarily for trading. |
| Costs to sell / to distribute | The incremental costs directly attributable to the disposal (or distribution) of an asset or disposal group, excluding finance costs and income tax expense. |
| Recoverable amount | The higher of an asset’s fair value less costs of disposal and its value in use. Used when an asset returns from held-for-sale to continuing use. |
3. The held-for-sale test IPSAS 44.11–15, 19–21
All three conditions below must be true before an asset (or disposal group) can be classified as held for sale.
Q1. Will the carrying amount be recovered mainly through sale, rather than continuing use?
No → keep as a normal non-current assetYes → go to Q2
Q2. Is it available for immediate sale, in its present condition, subject only to terms that are usual and customary for such sales?
No → keep as a normal non-current assetYes → go to Q3
Q3. Is the sale highly probable?
No → keep as a normal non-current assetYes → classify as held for sale
When is a sale “highly probable”? IPSAS 44.13
Every one of these conditions must be in place — not just one or two:
- The appropriate level of management is committed to a plan to sell the asset (or disposal group)
- An active programme to locate a buyer and complete the plan has been initiated
- The asset is actively marketed at a price that is reasonable in relation to its current fair value
- The sale is expected to qualify as a completed sale within one year of classification (subject to the limited exceptions in Appendix A, where a delay caused by events beyond the entity’s control does not preclude classification)
- Actions taken indicate it is unlikely that the plan will change significantly or be withdrawn
- Where required, the probability of regulatory or owners’ approval is factored into the assessment — common in the public sector
Available for immediate sale, in practice: a government entity committed to selling a municipal building, which it will hand over once it vacates, meets the “available now” condition at the commitment date — the time needed to vacate is usual and customary. But if the entity plans to keep using the building until a replacement is built, and will not transfer it until then, the condition is not met until the new building is ready — even if a firm purchase commitment exists earlier.
Held for sale versus abandoned IPSAS 44.20–21
Held for sale
Carrying amount recovered mainly through sale · actively marketed now · measured at lower of CA and FVLCTS, no depreciation
To be abandoned
Carrying amount recovered through continued use to the end of its economic life, or the asset will be closed rather than sold — never classified as held for sale
An entity also must not account for a non-current asset that has been temporarily taken out of use as if it had been abandoned — the two are not the same.
Worked Example 1
A disused port warehouse — Kenya Ports Authority
Kenya Ports Authority no longer needs an old warehouse. The board has approved a sale, a broker is marketing it, and a buyer is expected within eight months.
Required:
- Should the warehouse be classified as held for sale?
- State the conditions you relied on.
Solution
Yes — all three conditions in IPSAS 44.13 are met:
- Committed plan: the board has approved the sale
- Actively marketed: a broker is marketing the warehouse at a reasonable price
- Highly probable within a year: a buyer is expected within eight months
The warehouse is classified as held for sale from the date these conditions are met.
4. Measurement: lower of carrying amount and FVLCTS IPSAS 44.22–27
01 · The general rule
Measure at the lower of carrying amount and fair value less costs to sell (FVLCTS)
02 · Sale beyond one year
Discount the costs to sell to present value; any increase in that present value from the passage of time is a financing cost in surplus or deficit
03 · Held for distribution to owners
Lower of carrying amount and fair value less costs to distribute
For a newly acquired asset (or disposal group) that meets the criteria on acquisition, the measurement rule still produces the lower of its “would-have-been” carrying amount and FVLCTS — but the starting carrying amount depends on how it was acquired. Assets acquired through a public sector acquisition are measured at fair value on acquisition, so if held for sale they are measured at FVLCTS. Assets acquired through a public sector amalgamation are measured at carrying amount on acquisition, so if held for sale they are measured at the lower of that carrying amount and FVLCTS — this avoids recognising a gain on day one IPSAS 44.24.
When a disposal group is remeasured, assets and liabilities outside the measurement scope of this Standard (financial instruments, employee benefit assets, and so on) are first remeasured under their own applicable IPSAS — only then is the FVLCTS of the group as a whole determined IPSAS 44.26–27.
Worked Example 2
A power-station building — KenGen
KenGen classifies a decommissioned power-station building as held for sale. A valuer estimates the sale proceeds and the costs to complete the sale.
KES 50,000,000Carrying amount
KES 46,000,000Fair value
KES 2,000,000Costs to sell
Required:
- At what amount is the building carried?
- Give the journal entry.
Solution
FVLCTS = 46,000,000 − 2,000,000 = 44,000,000. The lower of carrying amount (50,000,000) and FVLCTS (44,000,000) is KES 44,000,000.
Dr Impairment loss .................. 6,000,000 Cr Building held for sale 6,000,000
5. Depreciation stops on classification IPSAS 44.33
Stop depreciation & amortisation
From the date of classification, for the asset itself or for the non-current assets inside a disposal group held for sale
Keep recognising interest
Interest and other expenses attributable to the liabilities of a disposal group continue to be recognised as normal
Remeasure assets first, then the group
Out-of-scope assets/liabilities follow their own IPSAS; the group’s FVLCTS is then determined
Worked Example 3
A university printing press
A public university classifies its printing-press machine as held for sale halfway through the year. The machine was being depreciated until that date.
Required:
- What happens to depreciation from the classification date?
- At what amount is the machine then measured?
Solution
| Stage | Treatment |
|---|---|
| In use (first half of year) | Machine is depreciating normally |
| Classified as held for sale | From that date, depreciation stops |
| Measured at | The lower of cost (carrying amount at classification date) and FVLCTS |
6. Impairment losses and reversals IPSAS 44.28–32
On write-down
Recognise an impairment loss for any initial or subsequent write-down to FVLCTS
On a later increase
Recognise a gain — but capped at the cumulative impairment loss already recognised (under this Standard, or previously under IPSAS 21 or IPSAS 26)
For a disposal group, an impairment loss (or subsequent gain) is allocated across the non-current assets within the measurement scope of this Standard, following the allocation order in IPSAS 26 — goodwill first, then pro rata across the remaining assets IPSAS 44.30–31. Any gain or loss not previously recognised by the date of sale is recognised at derecognition, following the derecognition requirements of IPSAS 45 (property, plant, and equipment) or IPSAS 31 (intangible assets) IPSAS 44.32.
Worked Example 4
A partial recovery — the KenGen building, continued
In a later period the fair value less costs to sell of the building rises again. The entity had already recognised a 6,000,000 impairment on it.
KES 3,000,000Recovery in FVLCTS
KES 6,000,000Cumulative impairment
Required:
- How much gain can be recognised?
- Give the journal entry.
Solution
The recovery of 3,000,000 sits within the 6,000,000 cumulative impairment cap, so the full gain is recognised.
Dr Building held for sale ........... 3,000,000 Cr Gain on remeasurement 3,000,000
7. When the sale plan changes IPSAS 44.34–38
Q. Are the held-for-sale (or held-for-distribution) criteria still met?
Yes → keep it classified as held for saleNo → cease the classification and remeasure
One exception sits outside this flow: reclassifying directly between held-for-sale and held-for-distribution-to-owners (in either direction) is treated as a continuation of the same disposal plan, not a “ceasing” — the entity simply applies the requirements for the new method of disposal and keeps the original classification date IPSAS 44.35.
Where classification genuinely ceases, the asset (or disposal group) is remeasured at the lower of:
- (a) its carrying amount before classification as held for sale, adjusted for any depreciation, amortisation, or revaluation that would have been recognised had it never been so classified; and
- (b) its recoverable amount at the date of the decision not to sell or distribute.
The resulting adjustment is recognised in surplus or deficit from continuing operations in the period the criteria cease to be met (unless the asset was a revalued item of PP&E or an intangible asset, in which case the adjustment is treated as a revaluation increase or decrease) IPSAS 44.37.
Worked Example 5
A cancelled sale plan — Water Services Board
A Water Services Board had classified an office block as held for sale, then cancelled the plan and will use it again. You must remeasure it.
KES 47,000,000Adjusted carrying amount
KES 45,000,000Recoverable amount
Required:
- At what amount is the office block remeasured?
Solution
Remeasure at the lower of the adjusted carrying amount (47,000,000) and the recoverable amount (45,000,000) = KES 45,000,000. The asset returns to continuing use, and depreciation resumes from this point.
8. Presenting held-for-sale assets IPSAS 44.48–50
Separate line
Held-for-sale non-current assets, and the assets of a disposal group held for sale, are shown apart from other assets in the statement of financial position — and their liabilities apart from other liabilities
No offsetting
The assets and liabilities of a disposal group are never netted into a single amount
No re-presentation
Prior-period statements of financial position are not reclassified or re-presented to reflect a later period’s classification
Results apart
Discontinued operations’ results are shown separately in the statement of financial performance
Major classes of assets and liabilities classified as held for sale are separately disclosed, either in the statement of financial position or in the notes — except for disposal groups that are newly acquired controlled entities meeting the held-for-sale criteria on acquisition, where this detail is not required. Any cumulative revenue or expense recognised in the statement of changes in net assets/equity relating to the held-for-sale asset (or group) is presented separately too.
9. Disposal groups & discontinued operations IPSAS 44.9, 40–47
These two ideas are often confused: a disposal group is about what is being sold (an asset package); a discontinued operation is about which activity is ending. A discontinued operation must additionally be one of the following:
Major operation
A separate major line of business or geographical area of operations
Coordinated plan
Part of a single coordinated plan to dispose of that line or area
Bought to resell
A controlled entity acquired exclusively with a view to resale
| Area | Disposal group | Discontinued operation |
|---|---|---|
| Meaning | Assets and liabilities sold together | A major operation or area stopped or sold |
| Focus | An asset package | An activity or service line |
| Size | Can be small | Must be major or separate |
| Performance | Gain or loss in continuing operations | A separate line of its own |
| Position | Assets and liabilities held for sale | Same — held for sale if not yet sold |
Presenting discontinued operations IPSAS 44.42–46
An entity discloses a single amount in the statement of financial performance, comprising the post-tax surplus or deficit of the discontinued operation plus the post-tax gain or loss on its remeasurement to FVLCTS or on disposal. An analysis — revenue, expenses, pre-tax result, related tax, and the remeasurement/disposal gain or loss with its own tax — is given either in the notes or, if shown in the statement of financial performance, in a section clearly separate from continuing operations. Net cash flows from operating, investing, and financing activities of the discontinued operation are disclosed too, and revenue is split between continuing and discontinued operations attributable to owners of the controlling entity.
Prior periods are re-presented so the disclosures cover everything discontinued by the end of the latest reporting period. If a current-period adjustment relates directly to a prior period’s disposal — resolving a purchase-price adjustment, an indemnification, retained environmental or warranty obligations, or settling an employee benefit obligation tied to the disposal — it is classified separately within discontinued operations, with its nature and amount disclosed. And if a component stops being held for sale, its previously-disclosed discontinued results are reclassified back into continuing-operations revenue for all periods presented, described as “re-presented.”
One more rule ties the two ideas together: a gain or loss on remeasuring a held-for-sale asset (or disposal group) that does not meet the discontinued-operation definition is simply included in surplus or deficit from continuing operations — it never gets its own separate line IPSAS 44.47.
Worked Example 6
A disposal group — county mechanical workshop
A county sells its old mechanical workshop — buildings, tools, and spare parts together with the related payables. It is an asset package, not a major operation.
KES 35,000,000Assets
KES 5,000,000Related liabilities
KES 28,000,000FVLCTS of group
Required:
- Compute the loss on classification.
- How are the assets and liabilities presented?
Solution
| Disposal group held for sale | KES |
|---|---|
| Assets before classification | 35,000,000 |
| Less: related liabilities | (5,000,000) |
| Net carrying amount | 30,000,000 |
| Fair value less costs to sell | 28,000,000 |
| Loss → continuing operations | (2,000,000) |
The 2,000,000 loss is allocated to the assets, which are then shown at 33,000,000 and the liabilities at 5,000,000 — presented separately, not netted. This is an asset package, not a discontinued operation, so the loss sits within continuing operations.
Worked Example 7
A discontinued operation — ministry regional training programme
A ministry discontinues and sells its entire regional training programme in the Coast Region — a separate major operation, not yet sold at year end.
KES 8,000,000Revenue
KES 11,000,000Expenses
KES 5,000,000Measurement loss
Required:
- Compute the loss from the discontinued operation.
- How is it presented?
Solution
| Discontinued operation — one line | KES |
|---|---|
| Revenue | 8,000,000 |
| Expenses | (11,000,000) |
| Operating deficit | (3,000,000) |
| Measurement loss to FVLCTS | (5,000,000) |
| Loss from discontinued operation | (8,000,000) |
Performance: the operating deficit and the measurement loss are combined and shown as one separate line, apart from continuing operations. Position: the related assets and liabilities remain presented as held for sale until the disposal completes.
10. The presentation rule IPSAS 44.38, 42, 48
One picture covers Examples 6 and 7: position is always the same once an asset or group is held for sale — presented separately, not offset. What differs is performance.
Not a discontinued operation
Performance: gain or loss sits within continuing operations.
Position: assets and liabilities held for sale, presented separately.
A discontinued operation
Performance: one separate line for the entire result.
Position: assets and liabilities held for sale, presented separately.
11. Common mistakes
Mistake: Classifying an asset as held for sale because management has “decided” to sell it eventually, with no active marketing yet.
Reality: All three conditions must hold together — recovered mainly through sale, available now, and the sale highly probable within a year — with an active programme to find a buyer already under way IPSAS 44.11–13.
Mistake: Continuing to depreciate an asset after classification “because it’s still on the premises.”
Reality: Depreciation and amortisation cease from the date of classification, regardless of where the asset physically sits IPSAS 44.33.
Mistake: Treating a building that has simply gone idle — demand has dropped, but it’s kept in workable condition for when demand returns — as “abandoned” or “held for sale.”
Reality: A temporarily idle asset maintained in workable condition is neither abandoned nor held for sale — it stays a normal non-current asset under its own IPSAS IPSAS 44.20–21.
Mistake: Netting the assets and liabilities of a disposal group into one figure on the statement of financial position.
Reality: Assets and liabilities of a disposal group are always presented separately and never offset IPSAS 44.48.
Mistake: Recognising the full amount of a subsequent fair-value increase on a held-for-sale asset as a gain.
Reality: The gain is capped at the cumulative impairment loss previously recognised on that asset — any excess above that cap is not recognised IPSAS 44.29.
12. Summary
01 · Classify when highly probable
Recovered mainly through sale, and available for immediate sale now
02 · Lower of CA and FVLCTS
And stop depreciation from the date of classification
03 · Disposal group = asset package
Gain or loss on remeasurement goes to continuing operations
04 · Discontinued operation = major activity
One separate line in performance; assets and liabilities held for sale in position
13. Check your understanding IPSAS 44.22
A power-station building has a carrying amount of KES 50,000,000. Its fair value less costs to sell is KES 44,000,000. At what amount is it carried once classified as held for sale?
A. KES 50,000,000 — always at carrying amount
B. KES 44,000,000 — the lower of carrying amount and FVLCTS
C. KES 47,000,000 — the average of the two
D. KES 94,000,000 — carrying amount plus FVLCTS
Answer: B. FVLCTS of 44,000,000 is below carrying amount, so the building is carried at 44,000,000 and the 6,000,000 difference is recognised as an impairment loss.
14. Quick reference table
| Topic | Key rule | Para(s) |
|---|---|---|
| Held for sale — classification | Carrying amount recovered principally through sale, not continuing use | 11 |
| Classification & presentation scope | All recognised non-current assets and all disposal groups | 3 |
| Measurement scope exclusions | Deferred tax, employee benefits, financial instruments, FV investment property, agricultural FVLCTS assets, insurance contracts | 6 |
| The held-for-sale test | Available for immediate sale + sale highly probable within one year | 12–13 |
| One-year exceptions | Delay beyond entity’s control + continued commitment to the plan | 15, Appendix A |
| Held for distribution to owners | Same classification/measurement logic, “distribute” for “sell” | 7, 19, 23 |
| General measurement | Lower of carrying amount and fair value less costs to sell (FVLCTS) | 22 |
| Sale beyond one year | Discount costs to sell to present value; unwind to finance cost | 25 |
| Newly acquired assets | Acquisition → FVLCTS; amalgamation → lower of CA and FVLCTS | 24 |
| Depreciation | Ceases from the date of classification as held for sale | 33 |
| Impairment loss | Recognise for any initial or subsequent write-down to FVLCTS | 28 |
| Reversal of impairment | Gain recognised, capped at cumulative impairment previously recognised | 29–30 |
| Gain/loss at derecognition | Per IPSAS 45 (PP&E) or IPSAS 31 (intangibles) | 32 |
| Ceasing classification | Remeasure at lower of adjusted pre-classification CA and recoverable amount | 36 |
| Reclassification held-for-sale ↔ held-for-distribution | Treated as continuation of the same plan; date unchanged | 35 |
| Presentation — held for sale | Separate line; assets and liabilities never offset; no re-presentation of prior periods | 48–50 |
| Discontinued operation — definition | Major operation/area, coordinated disposal plan, or controlled entity acquired for resale | 41 |
| Discontinued operations — performance | Single amount: post-tax result + post-tax remeasurement/disposal gain or loss | 42 |
| Re-presentation of prior periods | Restated to cover all operations discontinued by the latest period end | 43 |
| Gains/losses not meeting discontinued definition | Included in surplus or deficit from continuing operations | 47 |
| Additional disclosures | Description, facts & circumstances of disposal, gain/loss caption, segment | 51 |
| Fair value disclosure | Disclose FV when materially different from carrying amount | 52 |
| Effective date | Periods beginning on or after 1 Jan 2025; apply with IPSAS 43, Leases | 58 |
Abbreviations: CA = carrying amount · FVLCTS = fair value less costs to sell · FV = fair value · CGU = cash-generating unit · KES = Kenya Shillings.
By CPA Yussuf | CPFM · Public Sector Accounting and Reporting
Source: IPSAS 44, Non-current Assets Held for Sale and Discontinued Operations, as issued by the IPSASB (IFAC), incorporating amendments up to January 31, 2025.
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