A non-current asset (or disposal group)
should be classified as held for sale if its carrying amount will be
recovered principally through a sale transaction rather than through
continuing use.
A number of detailed criteria must be
met:
(a) The asset must be available for
immediate sale in its present condition.
(b) Its sale must be highly probable
-committed to a plan to
sell
-active
programme to locate a buyer
-marketed for
sale at a price that is reasonable)
(c) The sale should
be expected to take place within one year from the date of classification.
Measurement
of assets held for sale
A non-current asset (or disposal group)
that is held for sale should be measured at the lower of its carrying
amount and fair value less costs to sell. Fair value less costs to
sell is equivalent to net realisable value. An impairment loss should be
recognised where fair value less costs to sell is lower than carrying amount.
Note that this is an exception to the normal rule. IAS 36 Impairment of
assets requires an entity to recognise an impairment loss only where an
asset's recoverable amount is lower than its carrying value. Recoverable amount
is defined as the higher of net realisable value and value in use. IAS 36 does
not apply to assets held for sale. Non-current assets held for sale should
not be depreciated, even if they are still being used by the entity.
Presentation
Non-current
assets and disposal groups classified as held for sale should be presented separately
under current assets in the
statement of financial position.
Definition:
Fair value: the amount for
which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm's length transaction.*
Costs to sell: the
incremental costs directly attributable to the disposal of an asset (or
disposal group), excluding finance costs and income tax expense.
Recoverable amount: the higher of
an asset's fair value less costs to sell and its value in use.
Value in use: the present
value of estimated future cash flows expected to arise from the continuing use
of an asset and from its disposal at the end of its useful life.