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

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?

$33m

$32m

$35m

$30m

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...

...measure the non-current asset at the lower of its carrying amount before its asset was classified as held-for-sale (as adjusted for subsequent depreciation, amortisation, or re-valuations) and its recoverable amount at the date of the decision not to sell

...re-measure the non-current asset at fair value

...re-measure in accordance with applicable IFRS

...leave the non-current asset in the financial statements at its current carrying value

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

The operation is part of a single plan to dispose of a separate major line of business or geographical area

The operation should represent a separate line of business or geographical area

The operation must be sold within three months of the year end

The operation is a subsidiary acquired exclusively with a view to resale

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

It is unlikely that the non-current asset will be sold within 12 months

It may still be utilised

It is unlikely there will be an active market for the non-current asset

Its carrying amount has been recovered principally through continued use

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

...not be depreciated

...be tested monthly for impairment

...be depreciated over its remaining useful life

...be valued at depreciated historical cost

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

The entity should disclose a single amount on the face of the income statement with analysis in the notes or a section of the income statement separate from continuing operations

Discontinued operations should be shown as a line item after gross profit with the taxation being shown as part of income tax expense

The amounts from discontinued operations should be included with income form continuing operations and not shown separately

Discontinued operations should be shown as a movement in the statement of changes in equity only

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

The assets and liabilities should be presented as a single amount and as a deduction from equity

There should be no separate disclosure of the assets and liabilities

The assets and liabilities should be netted off and presented as a single amount in current assets or liabilities

The assets of the disposal group should be shown separately from other assets in the balance sheet and the liabilities of the disposal group should also be shown separately from other liabilities in the balance sheet

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?

The entity recognises an impairment loss of $6m

The entity recognises a loss of $2m

The entity recognises an impairment loss of $4m

The entity recognises a loss of $4m under IAS 16 immediately before classification as held-for-sale and then recognises an impairment loss of $2m

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

...the sale contract has been signed

...that the future sale will occur

...management must be committed to selling the asset and must be actively looking for a buyer

...that the future sale is might occur

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 -

The gain should not be recognised

The gain should be recognised to the extent that it is not in excess of the cumulative impairment loss that has been recognised

The gain should be recognised but only in retained earnings

The gain should be recognised in full in the income statement

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

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...

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

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

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

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

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

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

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 -

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