IFRS 5: Non-current Assets Held for Sale

Question 1

Define what is a disposal group.

Answer 1

A disposal group is defined as:
- a group of assets to be disposed of by sale / otherwise, together as a group in a single transaction

• and liabilities directly associated with those assets that will be transferred in the transaction

Question 2

What is the requirements for classifying a non-current asset as held for sale?

Answer 2

A NCA / DG is classified as held for sale when we expect that:
- its carrying amount will be recovered principally through a sale transaction rather than continuing use

Question 3

What is the two additional criteria that needs to be met to be said the CA will be recovered mainly through sale?

Answer 3

• the asset must be available for sale immediately in its present condition and based on normal terms
• the sale must be highly probable of occurring

Question 4

For a sale to be highly probable, what are the five additional criteria to be met?

Answer 4

• the appropriate level of management must be committed to the plan to sell
• an active program to try and sell the asset has begun
• it must be actively marketed at a selling price that is reasonable relative to its fair value
• the sale is expected to be completed within one year from date of classification as held for sale
• the remaining actions needed to complete the sale must suggest that the plan to sell not be withdrawn or significantly altered