IFRS 5 Disposal of NCA and Discontinued Operation

Question 1

Criteria for Asset for Sale

Answer 1

1. Management committed to a plan to sell
2. Asset available for immediate sale in its present condition
3. An active marketing programme to locate a buyer
4. The sale is highly probable and expected to be completed within one year from the date of classification
5. Asset is being marketed for sale at a price that is reasonable to its fair value.
6. Actions required to complete the plan is unlikely to change

Question 2

Definition of discontinued operation

Answer 2

A component of an entity that either has been disposed of, or is classified as held for sale:

1. separate major line of business or geographical area of operations
2. part of a single coordinated plan to dispose of a separate major line of business
3. A subsidiary acquired exclusively with a view of resale

Question 3

Definition

Answer 3

IAS 5 NCA HFS states that an impairment loss shall arise if the CA is higher than the FVLSC. Any resulting impairment loss is recognized to either OCI or SOPL if no previous revaluation reserve available.