NCA- Held for sale

Question 1

What are the criteria for Held for sale? When is an asset recognized held for sale?

Answer 1

1) Probable sale >12 months
2) Actively looking for a buyer
Reasonable Price

Question 2

Do we put Held for sale in Current assets or non-current assets?

Answer 2

Current asset as we are likely to convert the asset into cash within a year.

Question 3

If the Recoverable amount (FV-CTS) is lower than the carrying value? what do we do?

Answer 3

We record the impairment loss.

DR P/L CR PPE

You do prudence which is at lower carrying value and fair value - CTS

Question 4

If we do not use the assets, do we depreciate?

Answer 4

No we do not depreciate

Question 5

For example if the carrying value was 120 and HFS was 100 and when we revlaued this in Y/E it goes up to 150. What do we do?

Answer 5

So 20 of impairment loss should go to I/S initially and then at Y/e it should only be revalued up to 120, thus removing the impairment from the I/S since it can go upwards as far as the previous impairment.