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Impairment loss on a disposal group?


How do you account for impairment loss on a disposal group under IFRS 5? Are we required to allocate such loss to assets?

asked Jan 26, 2013 in IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations by AcMac Level 2 Member (4,170 points)
retagged Feb 16, 2013 by Mysio

1 Answer

0 votes
IFRS 5 deals with the accounting for non-current assets held-for-sale, and the presentation and disclosure of discontinued operations. It introduces a classification for non-current assets which is called ‘held-for-sale’.

An entity classifies a non-current asset as held-for-sale if its carrying amount will be recovered mainly through selling the asset rather than through usage. The classification also applies to disposal groups, which are a group of assets and possibly some liabilities which an entity intends to dispose of in a single transaction.

The conditions for a non-current asset or disposal group to be classified as held-for-sale are as follows:
the assets must be available for immediate sale in their present condition and its sale must be highly probable
the asset must be currently marketed actively at a price that is reasonable in relation to its current fair value
the sale should be completed, or expected to be so, within a year from the date of the classification, and
the actions required to complete the planned sale will have been made, and it is unlikely that the plan will be significantly changed or withdrawn.
For the sale to be highly probable, management must be committed to selling the asset and must be actively looking for a buyer. It is possible that the sale may not be completed within one year, but the delay effectively must be caused by events beyond the entity’s control and the entity must still be committed to selling the asset.
answered Dec 6 by Finance Professional Level 2 Member (4,680 points)


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