Week 2: Assets held for sale

Question 1

What is the objective of IFRS 5?

Answer 1

To specify:
- The accounting for assets held for sale.
- The presentation and disclosure of discontinued operations.

Question 2

What is the definition of a discontinued operation?

Answer 2

An entity that has been either
- Has been disposed
- Has been classified as held for sale

Question 3

What are the conditions for something to be classified as ‘asset held for sale’?

Answer 3

1) Must be available for immediate sale.
2) Its sale must be highly probable.

Question 4

What is the criteria for a sale to be highly probable?

Answer 4

• Management must be committed to plan to sell.
• Must be actively marketed for sale.
• Priced reasonably
  -Sale must be expected to complete within one year.

Question 5

How is the asset measured?

Answer 5

• depreciation of asset should not be depreciated following classification held for sale.
• measurement on classification date shoudl be lower of Carrying value and Fair value less costs to sell.