IFRS5 NCAHFS&DO

Question 1

The definition of NCA held for sale and disposal group

Answer 1

An entity should classify a NCA or disposal group as held for sale if its CA will be recovered mainly through a sale transaction rather than continuing use.

Disposal group is a group of assets to be disposed of, or together as a group in a single transaction and liability associated with assets will be transferred in the transaction.

Question 2

The classification criteria for NCA held for sale

Answer 2

The asset or disposal group must be available for immediate sale in its current condition.

The sale must be highly probable:
1. Managment must be commited to a plan to sell.
2. An active programme to locate a buyers has been initiated.
3. The sale is expected to be completed within 12 months of classification (subject to specified exception).
4. The asset is being marketed at reasonable price to FV.
5. Unlikely that significant changes will be made to the plan.

Question 3

Definition of discontinued operation

Answer 3

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

Question 4

Classification Criteria for discontinued operation

Answer 4

1. It represents a separate major line of business or geographical area of operations.
2. It is part of a co-ordinated plan to dispose of a separate major line of business or geographical area of operations.
3. It is a subsidiary acquired exclusively for resale.