W7 - NCAs held for sale and discontinued operations

Question 1

What is a Non-current assets held for sale

Answer 1

Non-current assets (or disposal groups) where the carrying value will be principally recovered through a sale transaction rather than continuing use

–> it is available for immediate sale in its present condition; and
–> its sale must be highly probable; and
–> it must be genuinely sold, not abandoned

Question 2

How do you measure a Non-current assets held for sale

Answer 2

-ts measured at lower of carrying value and FV - CtS

Question 3

How do you account for an impairment loss of a Non-current assets held for sale (DR/CR)

Answer 3

DR impairment loss / CR asset (carrying amount)

Question 4

What is a discontinued operation?

Answer 4

• A component of a business that has been disposed of or classified as held for sale (i.e. expected to be disposed of within a year) and:
  represents a separate major line of business or geographical area of operations, or
  is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or
  is a subsidiary acquired exclusively with a view to resale
• The operations and cash flows must be clearly distinguishable from other parts of the business – a cash generating unit (CGU)

Question 5

How do you account for an impairment loss of a Non-current assets held for sale

Answer 5

DR Impairment loss
CR Asset