NCA held for sale and discontinued operations Flashcards
What standard is NCA’s held for sale and discontinued operations?
IFRS 5
What is the criteria for an asset held for sale?
- Seeking a buyer
- Available for sale in its present condition
- Likely to sell
- Expected to sell within 1 year (from date of classification)
What is the criteria for a discontinued operation?
- Closed or sold during the year
- Held for sale at the year end and represents a separate major line of business or geographical area of operations, - is part of a single co-ordinated plan to dispose of a separate major line or business or geographical areas of operations
- is a subsidiary acquired exclusively with a view to resale
Where do assets held for sale get shown?
Current assets
Once an asset is held for sale, how would we account for it (4 ways)?
- Depreciated up to the date of classification and revaluation if appropriate (pro rate)
- Valued at lower of CV and FV less costs to sell
- Transfer from NCA to CA
- Depreciation should cease from the date of classification
If a NCA is being sold, what should we always mention?
Check if it needs to be impaired according to IAS 36
What is the pneumonic for non current assets held for sale?
SALE
What is typically tested with IFRS 5?
IAS 36 Impairment of Assets
What is the accounting treatment for disposing a group of Assets?
Identical to the single asset. Assets and liabilities must NOT be netted off
What is a component of an entity?
On that has operation and cashflows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity
What is the preferred presentation of a discontinued operation?
On the face of the P/L:
- The post tax profit or loss of discontinued operations
- The post tax gain or loss recognised on the remeasurement to FV less costs to sell or on the disposal of assets
