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I’m getting a bit muddled with what exactly must happen prior to classifying as held for sale.
1. Is it a rule of IFRS 5 that we must test for impairment prior to classifying as held for sale?
2. Can you confirm that there is no requirement to re-measure to FV when classifying as held for sale? i.e. we can still carry everything at their previous carrying values, just so long as they are lower than their FV less costs to sell?
IFRS 5 is a bit confusing but to answer your questions:
1. There is no requirement to perform an impairment review but by measuring the asset at the lower of CV and FVLCTS the asset will be impaired if the FVLCTS is the lower. It is an application of the prudence concept as if we know we will be selling at less than its CV then we should recognise the fall in value now as opposed until waiting for the final sale.
2. If the asset is held under the revaluation model then it must be revalued prior to classification as HFS, otherwise there is no need to measure to FV, unless as you state the FV is lower than CV.
Hope that clears up the issues.