Noncurrent Assets Held for Sale Flashcards
Chapter 15
It is an asset that does not meet the definition of a current asset
Noncurrent Asset
It is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction
Disposal group
An entity shall classify a noncurrent asset or disposal group as held for sale when
a. The carrying amount of the asset or disposal group is recovered through a sale transaction
b. The carrying amount of the asset or disposal group is recovered through continuing use
c. The noncurrent asset or disposal group is abandoned
d. The noncurrent asset or disposal group is idle or retired from active use
a. The carrying amount of the asset or disposal group is recovered through a sale transaction
For the sale of a noncurrent asset to be highly probable, which statement is incorrect?
a. Management must be committed to a plan to sell the asset
b. An active program to locate a buyer and complete the plan must been initiated
c. The asset must be actively marketed for sale at a reasonable price in relation to the current market fair value
d. The sale is expected to qualify for recognition as a completed sale within 2 years from the date of classification of the asset as held for sale
d. The sale is expected to qualify for recognition as a completed sale within 2 years from the date of classification of the asset as held for sale
An entity shall measure a noncurrent asset or disposal group classified as held for sale at
a. Carrying amount
b. Fair value less cost of disposal
c. Lower between carrying amount and fair value less cost of disposal
d. Higher between carrying amount and fair value less cost of disposal
c. Lower between carrying amount and fair value less cost of disposal
A noncurrent asset that is to be abandoned shall not be classified as held for sale because
a. The carrying amount is recovered principally through continuing use
b. It is difficult to value
c. It is unlikely that the noncurrent asset is sold within 12 months
d. It is unlikely that there is an active market for the noncurrent asset
a. The carrying amount is recovered principally through continuing use
In order for a noncurrent asset to be classified as held for sale, the sale must be highly probable. What is the meaning of high probable?
a. The future sale is likely to occur
b. The future sale is more likely than not to occur
c. The sale is certain
d. The probability is higher than more likely than not
d. The probability is higher than more likely than not
How should the assets and liabilities of a disposal group classified as held for sale be reported in the statement of financial position?
a. The assets and liabilities shall be offset and presented as a single amount
b. The assets of the disposal group shall be reported separately under current assets and the liabilities of the disposal group shall be reported separately under current liabilities
c. The assets and liabilities shall be presented as a single amount and as a deduction from equity
d. There should be no separate disclosure of assets and liabilities that form part of a disposal group
b. The assets of the disposal group shall be reported separately under current assets and the liabilities of the disposal group shall be reported separately under current liabilities
An entity acquired a subsidiary exclusively with a view to selling it. The subsidiary met the criteria to be classified as held for sale. At the end of reporting period, the subsidiary has not yet been sold and 6 months have passed since the acquisition. How will the subsidiary be measured in the statement of financial position at the date of the 1st financial statements after acquisition?
a. At fair market value
b. At the lower of cost and fair value less cost of disposal
c. At carrying amount
d. In accordance with applicable IFRS
b. At the lower of cost and fair value less cost of disposal
What is the treatment of any gain on a subsequent increase in the FV less cost of disposal of a noncurrent asset classified as held for sale?
a. The gain shall be recognized in full
b. The gain shall not be recognized
c. The gain shall be recognized but not in excess of the cumulative impairment loss previously recognized
d. The gain shall be recognized but only in retained earnings
c. The gain shall be recognized but not in excess of the cumulative impairment loss previously recognized
An entity recently moved to a new building. The old building is being actively marketed for sale and the sale is expected to be completed in 4 months. Which statement is incorrect regarding the old building?
a. It will be reclassified as an asset held for sale
b. It will be classified as a current asset
c. It will no longer be depreciated
d. It will be measured at historical cost
d. It will be measured at historical cost
An entity classified a noncurrent asset accounted for under the cost model as held for sale at the current year-end. Because no offers were received at an acceptable price, the entity decided at the end of next year not to sell the asset but to continue to use it. The asset shall be measured at the end of next year at what amount?
a. The lower of CA and recoverable amount
b. The higher of CA and recoverable amount
c. The lower between CA on the basis that the asset had never been classified as held for sale and recoverable amount
d. The higher between CA on the basis that the asset had never been classified as held for sale and recoverable amount
c. The lower between CA on the basis that the asset had never been classified as held for sale and recoverable amount
