Ch 10 - IFRS 5 Flashcards
What is IFRS 5?
Non-current Assets Held for Sale and Discontinued Operations.
Explain the criteria before an asset can be HELD FOR SALE?
- available for immediate sale in its present condition
and
- sale is highly probable.
What conditions need to be met if a sale is HIGHLY PROBABLE?
if ALL conditions are met:-
- management have a plan to sell the asset
- actively trying to locate a buyer
- asset is being marketed at a reasonable price
- sale to complete within one year from the date of classification
- unlikely for the plan to change significantly or be withdrawn.
Explain the 2 implications to the financial statements when an asset has been classified as HELD FOR SALE?
- measurement
- classification
Are Non-Current Assets depreciated if they are HELD FOR SALE?
NO - they are not depreciated if they are held for sale.
If the value of the asset HELD FOR SALE is less than carrying amount on SOFP what should happen?
It should be written down and the IMPAIRMENT charged against profit.
How do you classify an asset HELD FOR SALE in the financial statements?
This asset will be classified as a separate category of current asset.
Once an asset qualifies as HELD FOR SALE how should it be treated?
- valued at the lower of carrying amount or fair value less costs (is this TWDV, Tax Written Down Value)
- The carrying amount must be written down to the lower
- The impairment will be charged against profit for the year in the SOPL.
Prior to classification as HELD FOR SALE (the reporting date) how is the asset treated with regard to depreciation?
The asset will be treated inline with the applicable accounting standard and depreciated as normal until the date of classification as held for sale.
As assets valued under the REVALUATION MODEL that meet the criteria. the asset should be
Revalued as normal and then SEPARATELY written down to the fair value LESS costs to sell.
