Measurement of assets held for sale Measurement framework. When a company makes the decision to sell an asset or to stop some part of its business, it is making a decision that affects the future cash flows, profitability and overall financial situation. A42. (Intermediate Accounting 3) LECTURE AID 2020 ZEUS VERNON B. The audit practitioner would always aim at obtaining sufficient appropriate evidence to provide a reasonable basis for expressing a conclusion in an assurance report about Non-current Assets Held for Sale. No ABC license. d. the asset is expected to be sold within its normal operating cycle. Learn vocabulary, terms, and more with flashcards, games, and other study tools. When a subsidiary is classified as held for sale, all of its assets and liabilities are treated as a disposal group, even if the parent expects to retain a non-controlling interest after the sale (IFRS 5.8A). The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under IFRS 5-Non-current Assets Held for Sale and Discontinued operations. View CHAPTER 4_NON-CURRENT ASSETS HELD FOR SALE DISCONTINUED OPERATIONS_1.pptx from EDUCATION 608 at Delta State University. Non-current assets held-for-sale and assets of disposal groups must be disclosed separately from other assets in the balance sheet. Prepare a journal entry to record this transaction. Subsidiaries Held for Disposal. In order for the sale to be classed as ‘highly probable’, there must be certain characteristics present. (a) Cost of equipment = $200,000 (b) Accumulated depreciation = $180,000 (c) The equipment was sold at $23,000 in cash. Asset (or disposal group) that are available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups); and. A non-current asset must be classified as "held for sale” if: Select one: Ca. none of the options b. the asset is expected to be sold within 12 months after reporting period. IFRS 5 establishes conditions when the entity shall classify a non-current asset or a disposal group as held for sale. Specific disclosures are also required for discontinued operations and disposals of non-current assets. A fine looking deli in Anaheim is for Asset Sale, As-is condition. Non-current assets/disposal groups classified as held for sale are measured at the lower of: carrying value and; fair value less costs to sell … Go to favorites Close. Select one: Ca. Many long-lived assets which a company owns are specialized in nature and they can’t be sold over-night. First, I want to highlight the interaction of held for sale accounting with the held for use model. The measurement basis for non‐current assets classified as held‐for‐sale is to be applied to the group as a whole, and any resulting impairment loss will reduce the carrying amount of the non‐current assets in the disposal group. Classification: The classification and presentation requirements for all assets held for sale classified under IFRS 5 apply to all non-current assets (or disposal groups). Discontinued operation is a component of an entity that has either been disposed off or abandoned; or to be disposed off or to be abandoned. The consequential amendments to ASC 360 within ASU 2016-02 are limited, which has led to implementation questions about how the subsequent measurement guidance in ASC 360 applies to right-of-use assets. Subsidiaries already consolidated now held for sale Under ASPE, “non-current assets held for sale” are shown as current assets if the assets are sold before the completion of the F/S; IFRS makes no mention of this – however, if a similar situation occurs, we would likely show “non-current assets held for sale” as current assets. This section doesn’t apply to the following assets: deferred tax assets (IAS 12 Income Taxes), assets arising from employee benefits (IAS 19 Employee Benefits), financial assets within the scope of IAS 39, Investment Properties measured using fair value model (IAS 40), Biological assets measured at fair value less cost to sell (IAS 41), Disposal group = a group of assets to be disposed, possibly with some directly associated liabilities, together in a single transaction. Non-current assets held for sale Non-current assets or disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Prepare a journal entry to record this transaction. Classification of non-current assets (or disposal groups) as held for sale or as held for distribution to owners. Non-current assets held for sale Non-current assets or disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. In general terms, assets (or disposal groups) held for sale are not depreciated, are measured at the lower of carrying amount and fair value less costs to sell, and are presented separately in the statement of financial position. (a) Cost of equipment = $200,000 (b) Accumulated depreciation = $180,000 (c) The equipment was sold at $23,000 in cash. It sets the presentation and disclosure requirements for discontinued operations. The Interpretations Committee received a request to clarify a measurement requirement of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. 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