IFRS 5

Question 1

What is IFRS 5?

Answer 1

Non-current Assets Held for Sale and Discontinued Operations.

Question 2

Explain the criteria before an asset can be HELD FOR SALE?

Answer 2

• available for immediate sale in its present condition

and

• sale is highly probable.

Question 3

What conditions need to be met if a sale is HIGHLY PROBABLE?

Answer 3

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• unlikely for the plan to change significantly or be withdrawn.

Question 4

Explain the 2 implications to the financial statements when an asset has been classified as HELD FOR SALE?

Answer 4

• measurement
• classification

Question 5

Are NCA depreciated if they are HELD FOR SALE?

Answer 5

NO - they are not depreciated if they are held for sale.

Question 6

If the value of the asset HELD FOR SALE is less than carrying amount on SOFP what should happen?

Answer 6

It should be written down and the IMPAIRMENT charged against profit.

Question 7

How do you classify an asset HELD FOR SALE?

Answer 7

This asset will be classified as a separate category of current asset.

Question 8

Once an asset qualifies as HELD FOR SALE how should it be treated?

Answer 8

• valued at the lower of carrying amount or fair value less costs.
• The carrying amount must be written down to the lower
• The impairment will be charged against profit for the year in the SOPL.