Chapter 8: NONCURRENT

ASSETS HELD FOR SALE

Definitions:
NCA
o asset that does not meet the definition of a current asset
o individual or disposal group
Disposal group
o group of assets to be disposed of, by sale or otherwise. Together in a group in a
single transaction, and liabilities directly associated with those assets that will be
transferred in the transaction
o includes goodwill if the group is a CGU
Fair Value
o price that would be received to sell an asset
o payment to transfer liab in an orderly transaction
Cost of disposal
o incremental cost directly attributable to the disposal of an asset, excludes
FINANCE COST and INCOME TAX EXPENSE
PFRS 5, paragraph 6
o provides that a NCA or disposal group is classified as held for sale if the carrying
amount will be recovered principally through a sale transaction rather than
ongoing use
Conditions for classification as held for sale
1.) A/DG is available for immediate sale in the present condition; sold as seen
2.) Sale must be HIGHLY probable
Definition of highly probable
1.) Mgt must be committed to a plan to sell the asset or disposal group
2.) Active program to locate a buyer and complete the plan must have been initiated
3.) The sale is expected to be a completed sale within one year from the date of
classification as held for sale

an extension of the 1-yr period does not mean na hindi na siya considered as held
for sale lalo na if it is beyond the entitys control.
However, there must be SUFFICIENT evidence that the entity remains committed
to the plan to sell the asset or disposal group

4.) A/DG must be actively marketed for sale at a sale price that is reasonable in
relation to the fair value
5.) Actions required to meet the plan indicate that it is unlikely that the plan will be
significantly changed or withdrawn

Measurement of asset held for sale

PFRS 5, paragraph 15
o CARRYING AMOUNT VS. FAIR VALUE LESS COST OF DISPOSAL, whichever is
lower
PFRS 5, paragraph 25
o NCA classified as held for sale is NOT DEPRECIATED
Writedown to FV less COD
FV LESS COD is LOWER, theres impairment loss.
Impairment Loss
Equipment held for sale
If DG, impairment is prorated across the assets
Goodwill is written off first then prorated based on CA
Subsequent increase in FV
If there is increase in FV less COD, entity will recognize gain BUT not in excess of any
impairment loss previously recognized.
Revalued asset classified as held for sale
PFRS 5, paragraph 18
o Revalued to FV immediately PRIOR to the classification as held for sale
o Additional RS is equal to FV @ classification date less CA on that date
o COD at classification date is recog as IMPAIRMENT LOSS and deducted from the
asset
o @ subsequent year-end, revalued asset classified as held for sale shall be
measured at lower of CA and FV less COD
Abandoned current asset
PFRS 5, par 13
o entity shall not classify as held for sale a NCA or DG that is to be abandoned
o reason: CA will be recovered principally through continuing use or the nca is to
be used until the end
Temporarily abandoned
Not considered as ABANDONED

Reason: entity ceases to use a plant because demand for the prod has declined.
However, the plant is maintained in workable condition and it will be brought back to
life if demand picks up. Not regarded as abandoned.
Change in classification
No longer classified as held for sale
Measure @:
1.) CA before the asset was classified as held for sale adjusted for any depreciation
or amortization that would have been recognized had it not been classified as held
for sale
2.) Recoverable amount at the date of the subsequent decision not to sell