Assets held for sale & disc. ops.

Question 1

What are the criteria for a NCA to be classified as “held for sale”?

Answer 1

A P R 1

A vailable for immediate sale in present condition

P robable - a sale is highly probable

R easonable price has been set

1 year - sale is expected to complete within a year

Question 2

How is a non current asset held for sale to be measured?

Answer 2

Lower of;

Carrying amount

Fair value less costs to sell

Question 3

How is depreciation calculated on a NCA held for sale?

Answer 3

Trick Q - once classified as a NCA held for sale no further depn is charged off.

If the value of the asset held for sale is less than the CA the impairment should be charged off the the SPL

Question 4

What is the definition of a discontinued operation?

Answer 4

A component of an entity that has either been disposed of or is classified as held for sale and;

• that represents a separate major line of business or geographical area of operations
• that is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations

OR

that is a sub acquired exclusively with a view to resale

Question 5

In accordance with IFRS 5 NCA’s held for sale and discontinued ops what must be disclosed on the financial statements regarding discontinued ops?

Answer 5

There should be a single figure on the face of the statement for the total of;

• profit after tax
• gain or loss on disposal of assets
• gain or loss arising from the adjustment in value from carrying value to fair value