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Hello Sir
1) May I know what is the significance(s) of having this standard as i couldn’t visualize its importance.
2) (a) How to differentiate a Held for sale under IFRS 5 and Normal Disposal of Asset under IAS16
(b) If the scenario is as below, what would be the answer?
Scenario : In 2013, ABC Company bought a motor vehicle at $2000, depreciation is
provided at 20% p.a. However, in 2015, the company decided to sell the motor
vehicle at $ 3000. The fair value of the motor vehicle in 2016 is $ 3500. So, is the
disposal of motor vehicle treated as held for sale or normal disposal of asset?Thank you
Hi,
It is so that users of the accounts see what will not be in there in the following year and help make decisions about future performance and position.
We apply IFRS 5 once the criteria are met and then once sold it will be treated as a disposal.
In your example the decision to sell means it is treated under IFRS 5 as held for sale and measured at the lower of the carrying value and fair value less costs to sell. Presumably it will be sold in the next year when we then recognise a profit or loss on disposal.
Thanks
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