Chapter 8 (non-current assets held for sale and discontinued operations)

Question 1

How is an asset “held for sale” defined?

Answer 1

“If the value will be realised through a sale rather than through continuing use”

IFRS5 states that a non-current asset should be classified as held for sale if its carrying amount (the amount at which it is “carried” in the financial statements) “will be recovered principally through a sale transaction rather than through continuing use”

Question 2

How is “highly probable” defined, regarding to when the sale has to be completed?

Answer 2

1. The asset is actively marketed at a reasonable sale price
2. The assets to be sold are equal to at least a segment in the company
3. A completed sale is expected within a year
4. Management is committed to a plan to sell the asset
5. Management is committed to a plan to sell the asset and an active programme has been initiated to locate a buyer and complete the plan; and
6. The asset is being actively marketed at a sale price that is reasonable in relation to its current fair value; and
7. A completed sale is expected within one year from the date of classification (although this period may be extended if any delay is caused by circumstances beyond the entity’s control); and
8. It is unlikely that there will be any significant changes to the plan or that the plan will be withdrawn

Question 3

What is a disposal group?

Answer 3

CGU:s

Such a group is known as a “disposal group” and may consist of a number of cash-generating units, a single cash-generating unit or part of a cash-generating unit

Question 4

How is assets held for sale measured?

Answer 4

On a separate line after tax, including any gain/loss

Question 5

How is assets and liabilities held for sale presented in the statement of financial
position?

Answer 5

“Separately from other assets in the balance sheet, on one line”

Non-current assets held for sale and the assets of a disposal group held for sale should be presented separately from other assets in the statement of financial position. Similarly, the liabilities of a disposal group should be presented separately from other liabilities

Question 6

How is, in general, discontinued operations defined?

Answer 6

In general, a discontinued operation will represent “a separate major line of business or geographical area of operations”

Question 7

How is discontinued operations presented in the statement of comprehensive
income?

Answer 7

“On a separate line after tax, including any gain/loss”

An entity should disclose a single amount in the statement of comprehensive income, comprising the total of:

1. The post-tax profit or loss of discontinued operations, and
2. The post-tax gain or loss recognised on the measurement to fair value less costs to sell (or on the disposal) of the assets constituting the discontinued operation