Ch. 17 Non-current Assets Held for Sale and Discontinued Operations Flashcards
IFRS 5 and ASPE 3475
IFRS 5 and ASPE 3475
What are the criteria rules in order for a non-current asset to be recorded as held for sale? (5)
Management must be committed
There must be an active plan to find a buyer
Must be put for sale at a reasonable price
Sale should be expected to be completed within one year - must be ready to sell
Unlikely that there will be significant changes to the plan that is made
How are HFS non-current assets measured and recorded?
They’re recorded at the lower of:
FMV less Costs of selling
Carrying
What happens if there is a subsequent increase in selling price?
You are only allowed to mark up the asset to previous impaired amounts.
Impaired being instances in which Carrying > FMV less costs. Would record impairment of the differnece
What are the benefits of having an asset as HFS?
Depreciation ceases once it is HFS
How are HFS non-current assets recorded under IFRS?
They’re recorded as either current assets separated from other assets in the statement of financial position.
What are the differences between IFRS and ASPE
ASPE - does not apply if it is distributed to owners.
And assets are classified as current or non-current depending on their nature, it is current if sold prior to the completion of statements.
What are discontinued operations?
A component of the entity that is classified as HFS that meets the specific criterias
What are the criterias to be a discontinued operation?
Component of an enttiy taht either has been disposed of or is classified as HFS
- represents a sparate major line of business or geographical area
- is part of a single co-ordinate plan to dispose of a separate major line of business or geographical area
- is a subsidiary acquired exclusively to resell
It must also be a component of an entity that comprises operations and cash flows that can be clearly distinguished, oeprationally, and for financial reporting purposes from the rest of the entity.
