Chapter 6 - Non Current Assets Held For Sale

Question 1

Which standard covers non-current assets held for sale?

Answer 1

IFRS 5

Question 2

Which assets does IFRS 5 not apply to?

Answer 2

The below, due to being covered by other standards:

(A) deferred tax assets
(B) employee benefit assets under IAS 19
(C) financial assets under IFRS 9
(D) non-current assets which are investment property and using fair value under IAS 40
(E) non-current assets under IAS 41 (agriculture) at fair value less point-of-sale costs
(F) contractual rights under IFRS 4 insurance contracts.

Question 3

What is a disposal group under IFRS 5?

Answer 3

Group of assets and liabilities disposed of in a single transaction.

Question 4

When is a non-current assets regarded as held for sale?

Answer 4

Under IFRS 5, when an asset is intended for sale, but not through the course of ordinary business.

Available immediately in present condition

Sale highly probable

Transfer to be completed within 12 months.

Question 5

What is the definition of “sale highly probable” under IFRS 5?

Answer 5

• committed plan
• management actively finding a buyer
• withdrawal from the plan is unlikely

Question 6

What rules should be followed under IFRS 5 once a disposal group is identified as held for sale?

Answer 6

(A) carry at the lower of the carrying amount or fair value less costs to sell

(B) do not depreciate

(C) present separately in the statement of financial position

Question 7

True or false:

Assets held for sale are not depreciated

Answer 7

True

Question 8

Where an entity adopts the fair value method of any measurement of assets, how should any assets held for sale be treated?

Answer 8

Must be revalued to fair value immediately prior to the reclassification.

Upon reclassification to held for sale, the costs to sell are deducted and treated as an impairment loss.