NCA held for sale or discontinued operations

Question 1

When is an NCA classed as held for sale

Answer 1

If their carrying amount will be recovered through sales transactions rather than through continuing use

Question 2

What are the 2 criteria that must be met to be classified as NCA held for sale

Answer 2

• Must be available for immediate sale in its present condition
• Sale must be highly probable

Question 3

What are the 4 steps to deal with an NCA held for sale

Answer 3

1. Prior to HFS classification asset must be measured in accordance with IAS 16 or 38
2. Transfer from PPE/Intangible assets to new HFS category under Current assets
3. HFS asset held at the lower of carrying amount or fair value less cost to sell (any write off is charge to the P/L)
4. no further depreciation charged to HFS asset

Question 4

What is meant by discontinued operations

Answer 4

When a component of a company has been disposed of of is classified as held for sale

Question 5

What do you include in the workings of discontinued operations

Answer 5

• Revenue
• Expenses
• Profit before tax
• Income tax expense
• Post tax gain or loss on disposal of assets or remeasurement to fair value less cost to sell