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Question 1c) .
Hi sir, I don’t understand the effects of the share options. I understand the following
“IFRS 5 does NOT explicitly extend the requirements for held for sale to situations where
control is lost.”“2018 Conceptual Framework says that assets and liabilities should be derecognized in instances where control is lost.”
But I don’t understand the following.
“Therefore situations where the parent is committed to lose control should trigger a reclassification as held for sale. Whether this should be extended to situations where control is lost to other causes would be judgemental. It is possible therefore that Watson should be classified as held for sale.
Why would it trigger a reclassification as held for sale? Isn’t it supposed to instead trigger derecognition by applying the 2018 conceptual framework ?
?The best advice I can give is that you should remember that IFRS ALWAYS take precedence over Framework.
Only refer to Framework if:
1. You are asked to in the requirement (see Q3 in the same exam). OR
2. You cannot think of any accounting standard which would answer the question.Question is just testing basic knowledge of discontinuance definition and a sentence saying that loss of control may imply discontinuance – keep it nice and simple
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