IFRS 5 non-current assets held-for-sale and discontinued operations

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. An entity designates a group of assets as a disposal group. The carrying amount of these assets before classification as a disposal group was $35m. Upon being classified as held-for-sale the assets were revalued to $33m on the basis of their fair value in accordance with IAS 16. The entity feels that it would cost $3m to sell the disposal group. What would be the carrying amount of the disposal group in the financial statements?

  2. An entity has a non-current asset that has been classified as held-for-sale but the asset no longer meets the criteria to be held for sale. The entity should, therefore...

  3. One of the following criteria does not have to be met in order for an operation to be classified as discontinued -

  4. If a non-current asset is to be abandoned, it should not be classified as held-for-sale because -

  5. A non-current asset which has been classified as held-for-sale should...

  6. How should the income from discontinued operations be shown in the income statement?

  7. How should the assets and liabilities of a disposal group classified as held-for-sale be shown in the balance sheet?

  8. Joy Plc is planning to dispose of a collection of assets. These assets are a disposal group and the carrying amount of these assets immediately before classification was $40m. Joy uses the revaluation model in IAS 16. Upon being classified as a disposal group the assets were revalued to $36m under IFRS. Joy feels that the selling costs would amount to $2m. How would the revaluation of the assets on classification as a disposal group be treated in the financial statements?

  9. In order for a non-current asset to be classified as held-for-sale the sale must be highly probable. Highly probable means...

  10. Any gain on a subsequent increase in the fair value less cost to sell of a non-current asset classified as held-for-sale should be treated as follows -