IFRS 5 - Assets Held for Sale Flashcards
what is the time period for a non-current asset held for sale?
in the next 12 months
when can an entity classify a non-current asset as being held for sale?
if the company plans to recover the carrying amount through sale rather than continuing use
what would make a sale highly probable?
- mgmt must be committed to plan to sell
- actively marketed for sale at reasonable price
- sold within 1 year
can the entity get an extension to the 1-year requirement?
yes, if delays are caused by events out of the company’s control and they can provide sufficient evidence that they remain committed to their plan to sell
when can a NCA not be classified as HFS?
if the NCA is abandoned, as the CA will be recovered principally through continued use
at what do we measure a non-current asset held for sale?
at the lower of:
- FV less costs to sell
- carrying amount (at reclassification date)
what is the two-step process for reclassifying?
1) immediately before classification, we measure the asset in terms of other IFRS/IAS up to date of reclassification, test for imp and then the CA we get from this must be compared to FV less costs to sell; impair further if FV less costs to sell is lower
2) measure the asset in accordance with IFRS5 as HFS; compare FV less costs to sell to CA again and impair if necessary
can we reverse impairment?
yes, ltd to previous impairments
do we depreciate a non-current asset reclassified as held for sale?
no
which NCA when classified as HFS, will not be subject to the IFRS 5 measurement requirements?
- financial instruments
- investment property at FV
what do we do if the criteria for HFS are no longer met?
- cease classification
- reclassify to appropriate asset type, measure at lower of CA as if we never reclassified (do the depr missed) or RA at date of change in plan with an adjustment through P/L
can we still reclassify if IFRS 5 criteria is not met?
no, keep accounting at current treatment till criteria are met
what are the requirements for an entity to classify a non-current asset as held for sale?
- must be available for immediate sale
- sale must be highly probable
what kind of asset is a NCAHFS?
it is a current asset
what if we still use the asset whilst it is classified as NCAHFS?
no depreciation, asset is still going to be recovered predominantly through sale despite still being used. can still be reclassified as the req do not say that it must be withdrawn from use.
