5 Non-current assets held for sale and discontinued operations

Question 1

When should an asset be held for sale?

Answer 1

If it’s carrying amount will be recovered principally through a sale transaction rather than through continuing use

Question 2

When should a non current asset be reclassified to current assets held for sale?

Answer 2

Asset must be available for immediate sale and sale is highly probable

Question 3

For a sale to be highly probable it means that?

Answer 3

• management are committed to sell
• active programme
• asset is actively marketed
• asset is expected to be sold within 12 months
• unlikely that the plan will be significantly changed

Question 4

How should assets for sale be held at?

Answer 4

Lower of carrying amount and fair value less costs to sell

Question 5

What’s the impact on assets held for resale?

Answer 5

Losses recognised on reclassification but gains are not

Question 6

What is a discontinued operations?

Answer 6

A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale and is major, single plan and is a subsidiary acquired with a view to resale