Costs of disposal
IAS 36 deducts qualifying disposal costs from fair value when calculating fair value less costs of disposal. Examples can include legal costs, certain transaction taxes and costs of removing an asset, depending on the facts. Costs already recognised as liabilities or costs that would arise regardless of the disposal must be analysed carefully to avoid double counting. Apply the relevant standard’s definition in its particular context.
Worked example
An asset has fair value of $100,000 and directly attributable incremental legal and selling costs of $4,000. Fair value less costs of disposal is $96,000 before considering any other relevant items.
Common mistake
Deducting income tax and finance costs as IAS 36 disposal costs or ignoring directly attributable incremental selling costs.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |
