Set 3 - FR Chapter 17 Disc Ops

Question 1

Conditions under IFRS to qualify as HFS assets

Answer 1

• be available for immediate sale in present condition
• terms of sale must be usual and customary
• sale must be highly probable

Question 2

further actions to be taken to ensure sale highly probable

Answer 2

management must be committed
initiated program to locate a buyer
must be actively marketed for sale at a reasonable price
sale should be complete within one year
unlikely significant changes to plan will be made

Question 3

measurement of HFS

Answer 3

lower of carrying value and FV less costs to sell. loss in income.

Question 4

depreciation of HFS

Answer 4

ends when classified as HFS

Question 5

reversal of losses if FV increases

Answer 5

yes, up to value of previous impairment losses

Question 6

presentation of HFS

Answer 6

current assets, separate from other assets in balance sheet

Question 7

Disc. ops. defintion

Answer 7

component of an entity that either has been disposed of or is classified as HFS and meets one of:

• represents a separate major line of business or geographical area
• part of a single coordinated plan to dispose of a separate major line of business or geographical area
• subsidiary acquired exclusively to resell

Question 8

component of an entity defines

Answer 8

comprises of operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity

Question 9

steps to determine if a component is discontinued

Answer 9

1. meet one of the criteria for disc ops.
2. determine whether the components assets (together) have - already been sold OR meet the HFS criteria (applied to asset group, not individual components)

Question 10

measurement of disc ops

Answer 10

same as HFS - lower of carrying value and FV less costs to sell

Question 11

presentation of disc ops

Answer 11

separate from other assets/liabilities. if HFS, current assets.

Question 12

presentation on stat of comp inc

Answer 12

post tax profit or loss from disc. op

post tax gain or loss related to remeasurement or disposal of disc. op.

Question 13

ASPE differences

Answer 13

HFS does not apply to owner’s distributions
HFS assets classified as either current or non-current depending on nature. current is sold prior to completion of statements.
impairment reversals limited to that since designation as HFS (IFRS allows previous impairment losses)