10.1 IFRS 5 Non current assets held for sale

Question 1

Non current assets held for sale

Answer 1

• Parts of the business or separate assets that have not physically been disposed of but it is obvious they are no longer going to be used by the entity
• it will be classified a non current asset held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use

Question 2

IFRS 5 - Assets will be treated as held for sale if all of the following criteria are met

Answer 2

• it is available for immediate sale in its present condition (no major repairs needed)
• the sale is highly probably

Question 3

A sale is highly probably if all of the following conditions are met

Answer 3

• management are committed to a plan to sell the asset
• an active programme to locate a buyer has been initiated
• the asset is being actively marketed at a reasonable price
• the sale is expected to complete within one year from date of classification
• it is unlikely the plan will change significantly or be withdrawn

Question 4

The classification of an asset as held for sale has two implications to the FS

Answer 4

• measurement
• classification

Question 5

Measurement of non current assets held for sale

Answer 5

Value at lower of
* The carrying amount
* The fair value less costs of disposal (ie. selling costs)

• Prior to classification asset will be depreciated as normal
• At date of classification it is no longer depreciated
• If the value of the asset held for sale is less than the carrying amount on SOFP, it should be written down to the lower amount and the impairment charged against profit

Question 6

Presentation and disclosure

Answer 6

An asset held for sale will be classified as a separate category under current assets