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Acc 107 Week 4 Module

1) The document provides an instructional module on classifying non-current assets as "held for sale" according to PFRS 5 for an Intermediate Accounting 3 course. 2) It defines the conditions required to classify non-current assets as "held for sale", including being available for sale, a committed sale plan, and expected sale within one year. 3) The module discusses initial and subsequent measurement of assets held for sale at fair value less costs to sell, and exceptions for delays in sales outside management's control.

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249 views2 pages

Acc 107 Week 4 Module

1) The document provides an instructional module on classifying non-current assets as "held for sale" according to PFRS 5 for an Intermediate Accounting 3 course. 2) It defines the conditions required to classify non-current assets as "held for sale", including being available for sale, a committed sale plan, and expected sale within one year. 3) The module discusses initial and subsequent measurement of assets held for sale at fair value less costs to sell, and exceptions for delays in sales outside management's control.

Uploaded by

John Andrei Valenzuela
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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LA PATRIA COLLEGE

Santiago City

College of Accountancy and Management


INSTRUCTIONAL MODULE in ACC 107
Intermediate Accounting 3

TOPIC/S: Non-current Assets Held for Sale


A. Classifications as Held for Sale
B. Conditions for Classification
C. Measurement
D. Changes to a Plan of Sale
E. Disposal Group

WEEK: 4
Time Allotment: 3 Hours Online Class/Consultation Hours: MF-3:30- 4:30 P.M.

OBJECTIVES/ LEARNING OUTCOMES:


At the end of this module, the students shall be able to:
1. Describe the requirements for classifying assets as “held for sale.”
2. State the initial and subsequent measurement of “held for sale” assets.
3. Differentiate the following: (1) Noncurrent asset held for sale, (2) Disposal group, and (3)
Discontinued operations.

DISCUSSION:

NON-CURRENT ASSETS HELD FOR SALE

Core Principle
A noncurrent asset is presented in the classified statement of financial position as current asset only when
it qualifies to be classified as “held for sale” in accordance with PFRS 5.

Scope
PFRS 5 applies to the following non-current assets:
1. Property, plant and equipment
2. Investment property measured under the Cost model
3. Investments in associate or subsidiary or joint venture
4. Intangible assets

Classification of non-current assets (or disposal groups) as Held for Sale


A non-current asset (or disposal group) is classified as held for sale or held for distribution to owners if its
carrying amount will be recovered principally through a sale transaction rather than through
continuing use.

Conditions for classification as held for sale


A non-current asset (or disposal group) is classified as “held for sale” if all of the following conditions are
met:
1. The asset or disposal group is available for immediate sale in its present condition subject
only to terms that are usual and customary; and
2. The sale is highly probable (i.e., significantly more likely than not).
a. Management is committed to a plan to sell the asset;
b. An active program to locate a buyer has been initiated;
c. The sale price is reasonable in relation to its current fair value;
d. The sale is expected to be completed within one year; and
e. It is unlikely that the plan of sale will be withdrawn.

Exception to the one-year requirement


An extension of the period required to complete a sale does not preclude an asset (or disposal group) from
being classified as held for sale if:
1. the delay is attributable to events or circumstances beyond the entity’s control; and
2. there is sufficient evidence that the entity remains committed to its plan to sell the asset (or
disposal group)

Event after reporting period


If the criteria for classification as held for sale are met after the reporting period, an entity shall not
classify a non-current asset (or disposal group) as held for sale in those financial statements when issued.

Non-current assets that are to be abandoned


An entity shall not classify as held for sale a non-current asset (or disposal group) that is to be abandoned
since the asset’s carrying amount will be recovered through continuing use rather than principally through
a sale. An entity shall not account for a non-current asset that has been temporarily taken out of use as if
it had been abandoned.

Initial and subsequent measurement


1. Lower of carrying amount and fair value less cost to sell.
2. A write-down to fair value less cost to sell, and related reversal thereof, is recognized in profit or
loss.
3. Reversal of impairment is recognized as gain to the extent of cumulative impairment loss that has
been recognized.
4. Depreciation (amortization) ceases during the period an asset is classified as held for sale.

Changes to a plan of sale


A non-current asset that ceases to be classified as held for sale shall be measured at the lower of the
asset’s:
1. Carrying amount before it was classified as held for sale, adjusted for any depreciation,
amortization or revaluation that would have been recognized had the asset not been classified as held
for sale, and
2. Recoverable amount at the date of subsequent decision not to sell.

REFERENCE:
Millan, Z. CPA (2018). Intermediate Accounting 3. Bandolin Enterprises. Baguio City, Philippines.

QUIZ 4: There will be a quiz for this topic, “Non-current Assets Held for Sale” on September 25, 2020,
3:30-4:30 PM.

Congratulations for finishing the Module 4! Keep up the good work.

Prepared by:
CHRISTOPHER D. CHANGOLAN, CPA
Instructor Date

Reviewed/Approved:
AIZA P. RUMAUAC, CPA
Program Head, Accountancy Date

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