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A noncurrent asset - is an asset

that does not meet the definition of a current asset.

The concurrent asset may be an

individual asset, like land and building, or a disposal group.

 A disposal group - is a group of

assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction.

 PERS 5, paragraph 6, provides that

a noncurrent asset or disposal group is classified as held for sale. If its carrying amount will be recovered principally through a sale transaction rather than through continuing use.

The simply means that the

entity does not intend to use the asset as part of its on-going business but instead intends to sell it and recover its carrying amount principally through sale.

 The asset or disposal group is available for immediate

sale in its present condition subject only to terms that are usual and customary for sale of such assets or disposal group.
In other words, the current condition of the asset

should be adequate to be effectively "Sold as Seen"

The sale must be highly probable.

 Management must be committed to a plan to sell the asset or

disposal group.

An active program to locate a buyer and complete the plan must

have been initiated.

The sale is expected to be a "completed sale" within one year

from the date of clarification as held for sale.

The asset disposal group must be actively marketed for sale at a

sale price that is reasonable in relation to its fair value.

Actions required to complete the plan indicated that it is

unlikely that the plan will be significantly changed or withdrawn.

 PFRS 5, paragraph 15, provides that an entity shall

measure a concurrent asset or disposal group classified as held for sale at the lower for its carrying amount or fair value less cost to sale.
PFRS, paragraph 25, further provides that the

concurrent asset classified as held for sale shall not be depreciated.

 If the subsequently there is an increase in the fair value less cost

to sell, PFRS 5, paragraph 21, provides that the entity shall recognize a gain but not in excess of any impairment loss previously recognized.

Illustration: On January 1, 2011 an entity acquired an equipment at a cost of

P5,000,000 to be used in the ordinary course of business. The equipment has an estimated useful life of 10th years and a resudial value of P500,000.

On January 1, 2014 the equipment was classified as held for sale.

On such date. The fair value is less cost to sell was estimated at 1,900,000 on June 30, 2014 the equipment was sold for P1,500,000

 1. To remove the equipment from property, plant and

equipment and classify it sale on January 1, 2014.

Equipment held for sale - 3,650,000 Accumulated held for sale - 1,350,000

Equipment - 5,000,000
Cost - 5,000,000 Accumulated depreciation - (5,000,000 - 500,000/10 x

3) 1,350,000 Carrying amount - January 1, 2014 -3,650,000

2. To measure the equipment held for sale at the lower of carrying amount and fair value cost to sell on January 1, 2014. Impairment loss - 1,750,000 Equipment held for sale - 1,750,000 Carrying amount - 3,650,00,0 Fair Value, less cost to sell - 1,900,00 Impairment loss - 1,750,000 3. To record a sale of the equipment on June 20, 2014:

Cash - 1,500,000 Loss on sale equipment - 400,000 Equipment held for sale - 1,900,00

Note that the equipment held for sale is no longer depreciated from January 1 to June 30, 2014.

 Circumstances could arise leading to the concurrent asset no longer being

classified as held for sale.

For instance, there is a decision not to sell the concurrent asset or the criteria of

being classified as held for sale may no longer be met.

In such a case, PFRS 5, paragraph 27, provides the entity shall measure the

concurrent asset that ceases to be classified as held for sale at lower of:

A. Carrying amount before the asset was classified as held for sale adjusted for

any depreciation or amortization that would have been recognized if the asset had not been classified as held for sale.

B. Recoverable amount at the date of the subsequent decision not to sell.

PFRS 5, paragraph 3, provides

that assets classified as concurrent in accordance with PAS 1 shall not be reclassified as current assets until they meet the criteria to be classified as held for sale.

 Under Appendix A of PFRS 5, a discontinued operation is

defined as "a component of an entity that either has been disposed of or is classified as held for sale" and:
A. Represents a separate major line of business or

geographical area of operations.

B. Is part of a single co-ordinated plan to dispose of a

separate major line of business or geographical area of operations.

C. Is a subsidiary acquired exclusively with a view to resale.

 A component of an entity may be a

subsidiary, a major line of business or geographical segment whose operations and cash flows can be clearly distinguish, operationally and for financial reporting purposes, from the rest of the entity.

 A component of an entity is classified as "held for sale" if its

carrying amount will be recovered principally through a sale transaction rather than through continuing use.
For this to be the case, the component of an entity must be

available for immediate sale in its present condition and the sale must be highly probable.
In other words, the discontinued operation is accounted for

as a "disposal group classified as held for sale"

 PFRS 5, paragraph 33, provides that the

entity shall disclose a single amount on the face of the income statement comprising the total of post-tax profit or loss of the discontinued operation and the post-tax gain or loss recognized on the measurement to fair value less to cost sell or on the disposal of the assets or disposal group constituting the discontinued operation.

 PFRS 5, paragraph 38, provides that an entity shall also present

separately on the face of the statement of financial position the following information: assets.

A. Assets of the component held for sale separately from all other

B. Assets of the component held for the sale are measured at the lower

of fair value less to cost to sell and their carrying amount.

C. Liabilities of the component separately from all other liabilities.

D. Nondepreciation - concurrent assets of the component held for sale

shall not be depreciated.

 PFRS 5, paragraph 33, provides that

the net cash flows attributable to the operating, investing, and financing activities of a discontinued operation shall be separately presented in the statement of cash flows or disclosed in the notes.

 PAS 8 has identified two main

categories of accounting changes namely:

A. Change in accounting estimate.

B. Change in accounting policy.

 PAS 8 defines a change in accounting

estimate as "an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset that expected future benefit and obligation associated with the asset and liability".

 Estimates may be required for the following: A. Bad Debts B. Inventory Obsolescence

C. Useful Life, Residual Value, and expected pattern of

consumption of benefit of depreciable asset. D. Warranty Cost E. Fair value of financial assets and financial liabilities.

 The effect of a change in accounting estimate shall be

recognized currently and prospectively by including it in income or loss of:

A. The period of change if the change affects that

period only. B. The period of change and future periods if the change affects both.

Accounting policies are the

specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.

 Once selected, accounting policies must be applied

consistently for similar transactions and events.

A change in accounting policy shall be made only when: A. Required by an accounting standard or interpretation of

the standard.
B. The change will result in more relevant and faithfully

represented information about the financial position, financial performance and cash flows of the entity.

A change in accounting policy arises when an entity adopts a generally accepted accounting principle which is different from the one previously used by the entity. Examples of change in accounting policy are: A. Change in the method of inventory pricing from the FIFO to weighted average method.

B. Change in the method of accounting for long term construction contract.

C. The initial adoption to policy to carry assets at revalued amount. D. Change from cost model to fair value model in measuring investment property and property, plant and equipment. E. Change to a new policy resulting from the requirement of a new PFRS.

 A change in accounting policy required by a standard

or an interpretation shall be applied in accordance with the transitional provisions therein.

if the standard or interpretation contains no

transitional provisions or if an accounting policy is changed voluntarily, the change shall be applied restropectively or retroactively.

 "Restropective application" is applying a new

accounting policy to transactions, other events and conditions as if that policy had always been applied.
PAS 8, paragraph 22, provides that "an entity shall

adjust the opening balance of each affected component of equity for the earliest prior period presented and the comparative amounts disclosed for each prior period presented as if the new policy had always been applied."