Topic list Syllabus reference

Key terms
Measurement of assets held for sale

Fair value. The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Costs of disposal. 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 of disposal 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. (IFRS 5: App A)
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 of disposal. (IFRS 5: para. 15)
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FV (less disposal costs)

If the fair value of an asset less costs of disposal is lower than carrying amount, an impairment is loss should be recognised. An impairment loss on an asset held under IFRS 5 is charged to profit or loss.
Non-current assets held for sale should not be depreciated, even if they are still being used by the entity.
A non-current asset held for sale should be remeasured at each reporting date at which it is still classified as held for sale. Any further impairment is recognised and charged to profit or loss. If the fair value less costs of disposal of the asset increases, then the carrying amount of the asset can be increased and the resulting gain should be recognised in profit or loss, thus reversing the impairment loss. This gain should not be in excess of impairment losses previously recognised under IFRS 5 or under IAS 36 (before the asset was classified as held for sale) (IFRS 5: para. 21).