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on classification as held for sale = lower of carrying amonut and fair value less cost to sell
e.g as per question , Depreciated cost 120 FV=125 CV=105
first will record held for sale lower of CV and Fv i.e 105
increase in fair value 135 after impairment 120am i correct ? if correct thn why measure at 120 why not Cv of 105 as its lower
Hi,
The second part of this bit of the question is very tricky and not something that I would overly concern yourself with as it is testing some of the finer details of IFRS 5.
At the reporting date we are allowed to increase the value of the asset held for sale to its fair value less cost to sell, if it is higher than the current value of the NCA-HFS. The NCA-HFS is currently at $105 million and the reporting date FVLCTS is now $135 million, so we would like to increase the asset to the $135 million but we cannot, as it would take the value above the previous carrying value before treated under IFRS 5.
It is essentially reversing an impairment loss on the asset so we can only recognise the increase in value to the value it would have been previously, the $120 million. We cannot therefore increase it above the $120 million and so recognise a gain of $15 million through profit or loss.
Thanks
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