Group 2 IFRS 5

Non-current Assets Held
for Sale and Discontinued

Operations
Prepared by:
Alfonso, Edjohn
Malinao, Effie Marie
Mundoy, Paul Davin
Rasid, Sheriehana
Rule, Kurtney
Reviewed by:
Satina S. Muammil C.P.A.
Table of Contents
1 A Summary of IFRS 5: 1
Non-current Assets Held for Sale and
Discontinued Operations
2 Theories on IFRS 5 5
3 Problems on IFRS 5 24
4 Answer Key for Theories 52
5 Answer Key for Problems 55

A Summary of IFRS 5:
Non-current Assets Held for Sale and Discontinued Operations
When a company makes the decision to sell an asset or to stop some part of its business, it is
making a decision that affects the future cash flows, profitability and overall financial
situation. The users of the financial statements should be informed about these events.
Therefore, IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations was
issued to highlight the results from continued operations and to separate them from the results
of the ongoing activities.
OBJECTIVE OF IFRS 5
IFRS 5 focuses on two main areas:
1. It specifies the accounting treatment for assets (or disposal groups) held for sale, and
2. It sets the presentation and disclosure requirements for discontinued operations.
CLASSIFICATION
A non-current asset must be classified as held for sale if most of its carrying amount is
expected to be recovered via future cash flows from the sale of the asset rather than future
cash flows from use. IFRS 5 will not apply to a non-current asset that is going to be
abandoned, as the carrying amount of an abandoned asset will be recovered through future
use.
To classify an asset as held for sale, the asset or disposal group must be available for
immediate sale in its present condition and the sale must be highly probable. IFRS 5 sets out
criteria for the sale to be highly probable:
 Management must be committed to a plan to sell the asset;

 An active program to find a buyer must be initiated;
 The asset must be actively marketed for sale at a price that is reasonable to its current
fair value;
 The sale must be completed within one year from the date of classification;
 Significant changes to be made to the plan must be unlikely.
MEASUREMENT
Immediately before the asset is classified as held for sale, it should be measured under its
applicable IFRS. Subsequently, after it has been classified as held for sale it must be
measured at the lower of its carrying amount or fair value less costs to sell. However, IFRS 5
lists a few measurement exceptions:
 Deferred tax assets (IAS 12 Deferred Tax)

 Assets arising from employee benefits (IAS 19 Employee Benefits)
 Financial assets within the scope of IFRS 9 Financial Instruments
 Non-current assets that are accounted for under the fair value model in IAS 40
Investment Property
 Non-current assets that are measured at fair value less costs to sell in accordance with
IAS 41 Agriculture
 Contractual rights under insurance contracts as defined in IFRS 4 Insurance Contracts.
If any of the above assets are classified as held for sale, they must be measured under the
same accounting policy as before the classification. Although the accounting treatment of
these assets does not change, they must be presented separately from other assets and they
require additional disclosure.
DISCONTINUED OPERATIONS
A discontinued operation is a component of an entity that has been disposed of or is classified
as held for sale, and:
 Represents a separate major line of business or geographical area of operations,

 Is part of a plan to dispose of, or
 Is a subsidiary acquired solely with a view to resale.
IFRS 5 requires discontinued operations to be presented separately in the financial statements

to keep the readers of the financial statements informed about those operations the entity has
discontinued, and those operations the entity is continuing with in order to generate future
profits and cash flows.
IFRS 5 requires discontinued operations to be presented as follows:
1. In the statement of profit and loss and other comprehensive income: a single amount
comprising the total of:
 The post-tax profit or loss of the discontinued operation,

 The post-tax gain or loss recognised on the measurement to fair value less costs to
sell, and
 The post-tax gain or loss recognised on the disposal of assets or the disposal group
making up the discontinued operation.
The analysis of the single amount can be presented in the notes or on the face of the statement
of profit or loss and other comprehensive income.
2. In the statement of cash flows: the net cash flow attributable to the operating, investing and
financing activities of discontinued operations
In the statement of financial position: non-current assets of a disposal group must be

presented separately from other assets. The same applies for liabilities of a disposal group
classified as held for sale.
NON-CURRENT ASSETS HELD FOR SALE AND
DISCONTINUED OPERATIONS THEORIES
1. An entity classifies a non-current asset (or disposal group) as held for sale if its carrying
amount will be recovered principally through a sale transaction rather than through
continuing use. For such a classification to be made, except
a. the asset (or disposal group) is available for immediate sale in its present condition
subject only to terms that are usual and customary for sales of such assets (or disposal
groups) and its sale must be highly probable.
b. for the sale to be highly probable, the appropriate level of management must be
committed to a plan to sell the asset or (disposal group).
c. an active program to not locate a buyer and remake the plan must have been initiated.
d. the asset (or disposal group) is being actively marketed for sale at a price that is
reasonable in relation to its current fair value.
2. Events or circumstances may extend the period to complete the sale beyond one year. An
exception to the one-year requirement in the criteria above shall therefore apply in the
following situations in which such events or circumstances arise, except
a. at the date an entity commits itself to a plan to sell a non-current asset (or disposal
group), it reasonably expects that others (not a buyer) will impose conditions on the
transfer of the asset (or disposal group) that will extend the period required to
complete the sale, and actions necessary to respond to those conditions cannot be
initiated until after a firm purchase commitment is obtained, and a firm purchase
commitment is highly probable within one year.
b. an entity obtains a firm purchase commitment and, as a result, a buyer or others

unexpectedly impose conditions on the transfer of a non-current asset (or disposal
group) previously classified as held for sale that will extend the period required to
complete the sale, and timely actions necessary to respond to the conditions have been
taken, and a favourable resolution of the delaying tactics is expected.
c. during the initial one-year period, circumstances arise that were previously considered
unlikely and, as a result, a non-current asset (or disposal group) previously classified
as held for sale is not sold by the end of the period, and during the initial one-year
period the entity took action necessary to respond to the change in circumstances, the
non-current asset (or disposal group) is being actively marketed at a price that is
reasonable (given the change in circumstances), and the original criteria remain met.
d. An entity shall present and disclose information that enables users of the financial
statements to evaluate the financial effects of discontinued operations and disposals of
non-current assets or disposal groups.
3. In accordance with IAS 37 Provisions, contingent liabilities and contingent assets, a

provision is only recognised when:
a. an entity has a present obligation (legal or constructive) as a result of a past event.
b. it is probable that an outflow of resources embodying economic benefits will be

required to settle the obligation.
c. the entity has a detailed formal plan for restructuring, identifying, at least, the
business or part of the business concerned, the principal locations affected, the
location, function, and approximate number of employees who will be compensated
for terminating their services, the expenditures to be undertaken, and when the plan
will be implemented.
d. All of the above.
4. A restructuring provision includes those direct expenditures arising from the

restructuring, that is
a. costs of retraining staff
b. costs of relocating staff
c. marketing costs
d. necessarily entailed in the discontinuance
5. The following disclosures shall not be made in the notes in the period in which a non-
current asset (or disposal group) as held for sale has either been classified as held for sale
or sold:
a. a description of the non-current asset or disposal group.
b. a description of the facts and circumstances of the sale, or leading to the expected
disposal, and the expected manner and timing of that disposal.
c. if applicable, the segment in which the non-current asset (or disposal group) is
presented under IFRS 38 intangible assets.
d. the gain or loss recognised in accordance with IFRS 5 and, if not separately presented
on the face of the statement of comprehensive income, the caption in the statement of
comprehensive income that includes that gain or loss.
6. The classification and presentation requirements of IFRS 5 apply to all recognised non-
current assets and to all disposal groups of an entity. The measurement requirements of
IFRS 5 apply to all recognised non-current assets and disposal groups of an entity with
the exception of:
a. deferred tax assets.
b. assets arising from employee benefits.
c. financial assets included in the scope of IAS 39 Financial Instruments: recognition

and measurement.
7. Paragraph 15 requires an entity to measure a non-current asset (or disposal group)

classified as held for sale at the lower of its carrying amount and fair value less costs to
sell.
The measurement rules derived from the measurement principle are:
a. If a newly acquired asset (or disposal group) meets the criteria to be classified as held
for sale, on initial recognition it is measured at lower of its carrying amount and fair
value less costs to sell.
b. If the sale is not expected to occur beyond one year (in rare circumstances), the entity
shall measure the costs to sell at their present value.
c. Immediately before the subsequent classification as held for sale, the carrying
amounts of the assets (or liabilities) are measured in accordance with the applicable
Standards and Interpretations.
d. On subsequent re-measurement of a disposal group, the fair value of any assets and
liabilities that are not included in the scope of IFRS 5, but are included in a disposal
group classified as held for sale, shall be remeasured in accordance with the
applicable Standards before the fair value less costs to sell of the disposal group is
measured.
8. Recognition of impairment losses and reversals, except
a. An impairment loss is recognised for any initial or subsequent write-down of the asset
(or disposal group) to fair value less costs to sell to the extent that it was not
recognised on initial re-measurement.
b. With regards to individual assets: A gain is recognised for any subsequent increase in
fair value less costs to sell. This may not be in excess of the cumulative impairment
loss that was previously recognised in terms of IFRS 5 or IAS 36 Impairment of
Assets.
c. A gain or loss not previously recognised by the time of the sale of a non-current asset
(or disposal group) shall be recognised at the date of derecognition according to either
IAS 16 in respect of Property, plant and equipment and IAS 38 in respect of
Intangible assets.
d. A non-current asset should be depreciated or amortised while it is classified as held

for sale or while it is part of a disposal group classified as held for sale. Interest and
other expenses attributable to the liabilities of a disposal group classified as held for
sale, shall continue to be recognized.
9. IFRS 5 requires that an entity present:

a. a non-current asset classified as held for sale and the assets of a disposal group
classified as held for sale separately from the other assets in the statement of financial
position.
b. the liabilities of a disposal group classified as held for sale separately from other
liabilities in the statement of financial position.
c. the major classes of assets and liabilities classified as held for sale separately
disclosed either on the face of the statement of financial position or in the notes to the
financial statements (an exception is if the disposal group is a newly acquired
subsidiary that meets the criteria to be classified as held for sale on acquisition, then
disclosure of the major classes of assets and liabilities is not required.
10. If an entity has correctly classified an asset (or disposal group) as held for sale, but the
criteria for such a classification are no longer met, the entity shall (paragraph 26) cease to
classify the asset (or disposal group) as held for sale. In this situation, the entity shall
(paragraph 27) measure a non-current asset that ceases to be classified as held for sale at
the lower of its:
a. carrying amount before the asset (or disposal group) was classified as held for sale,
adjusted for any depreciation, amortisation or revaluation that would have been
recognised had the asset (or disposal group) not been classified as held for sale.
b. Recoverable amount at the date of the subsequent decision not to sell. (If the asset is
part of a cash-generating unit, its recoverable amount is the carrying amount that
would have been recognised after the allocation of any impairment loss arising on that
cash-generating unit under IAS 36).
c. Either A or B
d. Both A and B
11. IFRS5 covers:
1. The classification, measurement and presentation of assets “held for sale”

2. The classification and presentation of discontinued operation
3. The impairment of long-lived assets to be held and used
a. 1 and 2 only
b. 1,2, and 3
c. 1 and 3 only
d. All are false
12. A disposal group, which was part of a cash-generating unit:
a. Becomes a noncurrent asset

b. Becomes a separate cash-generating unit
c. Is ignored
13. Recoverable amount is an asset’s:
a. The lower of “fair value less cost to sell” and “value in use”
b. The higher of “fair value less cost to sell” and “value in use”
c. Fair value less cost to sell
d. Value in use
14. If the criteria are met after the end of reporting period, an undertaking shall:
a. Classify a noncurrent assets as “held for sale” in those financial statements

b. When those criteria are met, after the end of reporting period, but before the approval
of the financial statements for issue, the undertaking shall disclose the information in
the notes
c. Classify a noncurrent asset as “discontinued operations” in those financial statements
15. If a newly acquired asset is “held for sale”, the asset or disposal group will be measured
at:
a. Cost
b. The higher of “cost” and “fair value, less costs to sell”
c. The lower of “cost” and “fair value, less costs to sell”
d. Fair value, less costs to sell
16. If the asset or disposal group is acquired as part of a business combination, it shall be
measured at:
a. Cost
b. The higher of “cost” and “fair value, less costs to sell”
c. The lower of “cost” and “fair value, less costs to sell”
d. Fair value, less costs to sell
17. Subsequent re-measurement: provisions for obsolete inventory and doubtful debts should
be reviewed:
a. Before the group’s “fair value, less costs to sell is remeasured

b. At the same time that the group’s “fair value, less costs to sell” is remeasured
c. After the group’s “ fair value, less costs to sell” is remeasured
15. The profit or loss of a discontinued operation should be disclosed…
a. in the Statement of Financial Position under “Retained Profit and Loss”

b. as a single amount in the Statement of Comprehensive Income
c. as part of normal trading profit and loss in the Statement of Comprehensive Income
d. as a note to the financial statements
18. A discontinued operation is defined as a component of an entity which:

a. Has been disposed of
b. Is classified as held for sale
c. Has been disposed of or is classified as held for sale
d. Is expected to be disposed of within the next 12 months
19. With regard to discontinued operations, an entity's statement of comprehensive income

should show a single amount comprising:
a. The post-tax profit or loss of discontinued operations
b. The post-tax profit or loss of discontinued operations and the post-tax gain or
loss on the remeasurement or disposal of the assets of discontinued operations
c. The pre-tax profit or loss of discontinued operations
d. The pre-tax profit or loss of discontinued operations and the pre-tax gain or loss on
the remeasurement or disposal of the assets of discontinued operations.
21. A non-current asset should be classified as held for sale only if:
a. Its carrying amount will be recovered principally through a sale transaction
rather than through continuing use
b. Its carrying amount will be recovered wholly through a sale transaction rather
than through continuing use
c. Its carrying amount will be recovered principally through continuing use rather
than through a sale transaction
d. Its carrying amount will be recovered wholly through continuing use rather
than through a sale transaction
22. The conditions which must be satisfied in order for the sale of an asset to be deemed
"highly probable" include:
a. Management is considering a plan to sell the asset

b. The asset is being marketed at a price which greatly exceeds its fair value
c. A completed sale is expected within five years
d. None of the above
23. A disposal group always consists of a number of cash-generating units.
a.TRUE b.FALSE c.BOTH d.NONE
24. A non-current asset held for sale should be measured at:
a. The higher of the asset's carrying amount when originally classified as held for sale
and its fair value less costs to sell
b. The asset's carrying amount when originally classified as held for sale, less any
accumulated depreciation since that date
c. Fair value less costs to sell
d. The lower of the asset's carrying amount when originally classified as held for sale
and its fair value less costs to sell
25. IFRS 5 requires the following disclosures about assets (or disposal groups) that are held
for sale, except:
a. description of the non-current asset or disposal group

b. description of facts and circumstances of the sale (disposal) and the expected timing
c. The disposal group is a newly acquired subsidiary that meets the criteria to be
classified as held for sale on acquisition.
d. Impairment losses and reversals, if any, and where in the statement of comprehensive
income they are recognized.
26. If certain types of asset are classified as held for sale, they should continue to be
measured in accordance with the standard that normally applies to that type of asset rather
than being measured in accordance with the requirements of standard IFRS5.
27. An asset which ceases to be classified as held for sale should be measured at the lower of
its carrying amount before being classified as held for sale (less any depreciation that would
normally have been charged in the meantime) and:
a. Fair value less costs to sell at the date of the decision not to sell
b. Value in use at the date of the decision not to sell
c. The higher of fair value less costs to sell and value in use at the date of the
decision not to sell
d. The lower of fair value less costs to sell and value in use at the date of the decision
not to sell
28. Non-current assets held for sale should be presented separately from other assets in the
statement of financial position.
29. A discontinued operation is defined as a component of an entity which:
a. Has been disposed of

b. Is classified as held for sale
c. Has been disposed of or is classified as held for sale
d. Is expected to be disposed of within the next 12 months
30. With regard to discontinued operations, an entity's statement of comprehensive income

should show a single amount comprising:
a. The post-tax profit or loss of discontinued operations

b. The post-tax profit or loss of discontinued operations and the post-tax gain or
loss on the remeasurement or disposal of the assets of discontinued operations
c. The pre-tax profit or loss of discontinued operations
d. The pre-tax profit or loss of discontinued operations and the pre-tax gain or loss on
the remeasurement or disposal of the assets of discontinued operations
31. Mega Corp has committed to closing a factory six months after the end of the current
financial year. The factory represents 15% of its annual sales. How should this be presented
in the current financial statements?
a. As a discontinued asset under IFRS 5

b. As an asset held for sale under IFRS 5
c. As a note in the financial statement
d. None of these.
32. Under which of the following circumstances are subsidiaries held for disposal classified
as ‘held for sale’?
a. When the subsidiary is acquired for a temporary purpose intended for resale
b. When the losses of a subsidiary exceed its net worth
c. When the subsidiary has made continuous losses for three or more periods
d. When the subsidiary is a foreign subsidiary
33. Soapy Co produces soaps and detergents. However due to lack of demand in the vicinity,
it is proposing to relocate to another country. The machinery has been dismantled and packed
up for relocation. It is proposed to use the same machinery in the foreign country. What
treatment is appropriate regarding this machinery?
a. Write off the machinery as obsolete

b. Classify the machinery as “held for sale”
c. Dispose of the machinery and account for the profit or loss
d. None of these
34. In order to classify an asset as ‘held for sale’, then the sale should be highly probable. In
this context, ‘Highly probable’ means…
a. the sale may not occur

b. the sale will not occur
c. the sale is 100% certain
d. the probability of sale is more than the probability of not selling
35. The profit or loss of a discontinued operation should be disclosed…
a. in the Statement of Financial Position under “Retained Profit and Loss”

b. as a single amount in the Statement of Comprehensive Income
c. as part of normal trading profit and loss in the Statement of Comprehensive Income
d. as a note to the financial statements
36. Which of the following is not a requirement to classify an asset (or disposal group) as
“held for sale”?
a. Management intends to sell the asset

b. The asset is available for immediate sale
c. The asset is marketed for sale
d. A reasonable sales price is sought in relation to its fair value
37. An entity is planning to sell a building and has started marketing the property. It is still
occupying the building, though another building is being constructed nearby for relocation.
The entity will relocate the staff only after the other building is completed in eight months.
Which of the following treatments is appropriate?
a. Classify this building as ‘held for sale’ as per IFRS 5

b. Classify both the buildings as ‘held for sale’ as per IFRS 5
c. Disclose the intention to sell in the explanatory notes without classification as ‘held
for sale’
d. Treat this operations as discontinued operations under IFRS 5
38. Pyramid Limited acquires a subsidiary exclusively with a view to selling it. As at the
balance sheet how should this be measured?
a. Fair value
b. Lower of cost and fair value less estimated cost to sell
c. Replacement value
d. Market value
39. When presenting discontinued operations in the cash flow statement…
a. they are pooled with other current assets

b. they are shown separately
c. they are ignored
d. they are added to non-cash items
40. A disposal group is a group of:
a. identical assets
b. non-identical assets
c. assets having no disposal cost
d. assets which are intended to be disposed in one single transaction
41. What does it mean to be "highly probable"?
a. Significantly existing than not

b. Significantly more like than not
c. More likely than not
d. Probable to happen than not
42. PFRS 5 does not apply to the following, except:
a. Deferred tax asset

b. Biological asset
c. Intangible asset
d. Asset arising from employee benefits
43. When is a noncurrent asset classified as current asset?
a. If they meet the criteria to be classified as held for sale under PFRS 5
b. If recovered principally through continuing use
c. When it is to be used at the end of their economic life
44. Higly probable is evidence by the existence of the following
a. Committed to a plan to sell the asset

b. Must be actively marketed for sale at a price that is reasonable in relation to its current
fair value
c. Actions required to complete the plan should indicate that is unlikely that significant
changes to the plan will be made or that the plan will be withdrawn
d. Specifies all significant terms including price and timing of transactions
45. A noncurrent asset or a disposal group shall be classified as held for sale and is part of the
current asset if the following conditions are met
a. Not available for immediate sale

b. Available for immediate sale and sale is probable
c. Available for immediate sale in its present condition and is highly probable
d. Group in a single transaction and is a cash generating unit
46. An extention of the period required to complete a sale does not preclude an asset from
being classified as held for sale if:
a. The entity delay is attriburable to events or circumstances beyond the entity's control
b. There is sufficient evidence that the entity remains committed to its plan to sell the
asset (or disposal group)
c. A. Only
d. Both A and B
47. A noncurrent assets to be abandoned include noncurrent assets or disposal group that is:
a. To be used to the end of their economic life

b. Are to be used rather than sold
c. Both A and B
48. How will the entity measure the cost to sell if the sale is expected to occur beyond one
year?
a. At fair value
b. At their present value
c. At historical cost
d. At value in use
49. Reversal of impairment ia recognized as
a. Loss to the extent of cumulative impairment that has been recognized

b. Gain to the extent of cumilative impairment loss that has been recognized
c. Gain or loss as included in profit or loss
d. Additional impairment loss on initial classification
50. Which of the following does not comprises discontinued operations?
a. Represents a major line of business or geohraphical area of operations

b. Is part of a single coordinated plan to dispose of a separate major line business
c. Reclassified directly from held for sale to being held for distribution to owners or vice
versa
d. Is a subsidiary acquired exclusively with a view to resale.
51. If the criteria are met after the end of reporting period, an undertaking shall
a. Classify a non-current asset as held for sale in those financial statements
b. When those criteria are met, after the end of the reporting period, but before the
approval of the financial statements for issue, the undertaking shall disclose the
information in the notes
c. Classify a non-current asset as discontinued operations in those financial statements
d. Classify a non-current asset as continuing operations in those financial statements
52. If a newly acquired asset is held for sale, the asset or disposal group will be measured
at
a. The higher of cost and fair value less cost to sell
b. Cost
c. Fair value less cost to sell
d. The lower of cost and fair value less cost to sell
53. If the asset or disposal group is acquired as part of a business combination, it shall be
measured at
a. The lower of cost and fair value less cost to sell

b. Cost
c. The higher of cost and fair value less cost to sell
d. Fair value less cost to sell
54. Subsequent re-measurement: Provisions for obsolete inventory and doubtful debts
should be reviewed
a. Before the group’s fair value less cost to sell is re-measured

b. At the time that the group’s fair value less cost to sell is re-measured
c. After the group’s fair value less cost to sell is re-measured
d. Anytime the group’s fair value less cost to sell is re-measured
55. An adjustment to the carrying amount of a non-current asset that ceases to be

classified as held for sale is recorded in
a. Income from continuing operations
b. Income from discontinued operations
c. Equity
d. Profit and loss
56. For an asset to be held for sale:
i. It must be available for immediate sale in its present condition

ii. Its sale must be highly probable
iii. The management must be committed to a plan to sell the asset
iv. The management must have an active program to locate a buyer
v. The asset must be actively marketed for sale
vi. The sale should be expected to be completed within one year from the date of
classification
vii. VII. The asset should be fully depreciated
a. I, II, III, IV, V, VI VII

b. I,II,III,IV,V
c. I,II,III,IV
d. I,II,III,IV,V,VI
57. The result of discontinued operations are presented separately in the statement of
profit or loss and other comprehensive income
a. As part of the regular line items

b. As a single amount net of tax
c. As a single amount gross of tax
d. B or C
58. Which of the following is included in profit from continuing operations
a. Extraordinary items
b. Discontinued operations
c. Other comprehensive income
d. Income tax expense
59. A noncurrent asset classified as held for sale in accordance with PFRS 5 has not been
sold for a year. The asset shall continue to be presented as held for sale under PFRS 5 if
a. The delay is due to events beyond the entity’s control

b. The entity remains committed to its plan to sell the asset
c. The noncurrent asset is actually sold after the reporting period but before the financial
statements were authorized for issue
d. Both A and B
60. The criteria under PFRS 5 for classifying an asset as “held for sale” are most likely
met in which of the following instances?
a. Bibi Co. plans to sell its office building. However, the sale will not take place until
Bibi Co. finishes constructing the new building.
b. Chimon Co. plans to sell its machinery. However the sale will not take place until
after Chimon completes its production backlog.
c. Nanon, Inc. plans to sell its delivery truck. However, the sale will not take place until
after Nanon, Inc. finishes a major overhaul on the truck’s engine
d. Gun Co. plans to sell its building, classified as investment property measured under
cost model, and is without any renovations.
61. Non-current Assets Held for Sale and Discontinued Operations is under what PFRS?
a. PFRS 5 /
b. PFRS 8
c. PFRS 10
d. PFRS 17
62. Assets classified as noncurrent in accordance with PAS 1 are classified as current
assets only if
a. They meet the criteria to be classified as held for sale under pfrs 5.
b. They not meet the criteria to be classified as held for sale under pfrs 5.
c. They meet some of the criteria to be classified as held for sale under pfrs 5.
d. They meet the criteria to be classified as held for sale under pfrs 6.
63. Non-current asset is an asset that does not meet the definition of
a. Current asset
b. Intangible assets
c. Deferred assets
d. Acquired assets
64. Noncurrent assets within the scope of pfrs 5 except
a. Property, Plant and Equipment

b. Intangible Assets
c. Investment Property measured under cost model
d. Financial Instruments
65. Noncurrent assets outside the scope of pfrs 5 except

a. Deferred tax assets
b. Asset arising from employee benefits
c. Financial Assets
d. Investment in associate, subsidiary, joint venture
66. Is a group of assets to be disposed of by sale or otherwise, together as a group in a

single transaction, and liabilities
a. Disposal Group
b. Disposal Portion
c. Disposal Part
d. Disposal Accumulation
67. A noncurrent asset of disposal group is classified as held for sale if its carrying
amount will be
a. Recovered principally through sale
b. Recovered through continuing use
c. Not recovered at all
d. Recovered through lease
68. The following are the conditions to be met to be classified as held for sale except
a. The noncurrent asset or disposal group is available for immediate sale at present
condition.
b. The sale is highly probable
c. The entity is committed in selling the asset
d. The sale price is reasonable base to the asset’s historical value
69. A noncurrent asset or disposal group that meets the criteria for classification as held
for sale only after the reporting period
a. Is not considered as classified as held for sale in the current period’s financial
statements.
b. Is considered as classified as held for sale in the current period’s financial statements.
c. Can be considered since some of the criteria were met
d. Can be considered because the event was treated as an adjusting event
70. A property dividends that are classified as held for distribution to the owners declared
as noncurrent when
a. They are available for immediate distribution in their present condition

b. They are not available for immediate distribution in their present condition
c. They are available for immediate distribution in their present condition but the
distribution is not highly probable
d. They are available for immediate distribution in their present condition and the
distribution is highly probable
71. A noncurrent asset or disposal group that is to be abandoned is
a. Not classified as held for sale

b. Can be classified as held for sale
c. Not classified as held for sale but its carrying amount can be recovered through not
continuing use.
72. Held for sale assets and disposal group are initially and subsequently measured at
a. Lower of carrying amount and fair value less cost to sell

b. Lower of carrying amount
c. Fair value less cost incurred
d. Historical cost
73. Noncurrent assets that are temporarily taken out of use are
a. Not treated as if they have abandoned

b. Treated as if they have abandoned
c. Not treated as if they have abandoned and partially treated as abandoned
d. Neglect the recognition since the value is immaterial
74. Is the price received to sell an asset or paid transfer a liability in an orderly transaction
a. Fair Value
b. Historical Value
c. Company Value
d. Value Index
75. The incremental costs directly attributable to the disposal of an asset or disposal group
a. Cost to sell
b. Depreciation
c. Amortization cost
d. Residual Value
76. Subsequent changes in fair value less cost to sell are recognized in
a. Profit or loss
b. Comprehensive Income
c. Retained Earnings
d. Gross Income
77. Held for sale assets are not depreciated or amortized while they are classified as held
for sale
a. Yes
b. No
c. Maybe
78. Is a component of an entity that either has been disposed of or is classified as held for
sale.
a. Discontinued Operations
b. Continuing Operations
c. Postpone Operations
d. Delayed Operations
79. Is the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other asset of group of assets
a. Cash Generating Unit

b. Entity’s Component
c. Financial Instruments
d. Cash and Cash Equivalents
80. Discontinued operations occur at the earlier of the date the component
a. Is actually disposed of and the date of the criteria for classification as held for sale
met /
b. Is not actually disposed of and the date of the criteria for classification as held for sale
met
c. Is actually disposed of and the date of the criteria for classification as held for sale not
met
d. d.Is not actually disposed of and the date of the criteria for classification as held for
sale not met.
81. What are the conditions that must be met for a noncurrent asset or disposal group to be
classified as held for sale?
a. The asset or disposal group is available for immediate sale in the present condition
subject only to terms that are usual and customary.
b. The sale must be highly probable.
c. Both A and B
82. PFR 5, paragraph 15, provides that an entity shall measure a noncurrent asset or disposal
group classified as held for sale at the:
a. Lower of carrying amount and fair value less cost of disposal

b. Fair value less cost to sell
c. Carrying amount
83. When do the results of discontinued operations presented?
a. After profit or loss from continuing operations.

b. Before the profit or loss from continuing operations.
c. After the reporting period
84. When are noncurrent assets or disposable groups, declared as property dividends, held for
distribution to owners?
a. When it is to be abandoned already.

b. When they are available for immediate distribution in their present condition and the
distribution is highly probable.
c. After the assessment period.
d. None of the above.
85. Which among the following noncurrent assets do not belong within the scope of IFRS 5?
a. PPE
b. Deferred Tax Assets
c. Intangible assets
d. Investment properties measured under cost model
86. IFRS 5 does not apply to which of the following assets?
a. Investment property measured under cost model

b. Investments in associate or subsidiary or joint venture
c. Intangible assets
d. Inventories and accounts receivable
87. According to IFRS 5, a noncurrent asset is classified as held for sale:
a. If its carrying amount will be recovered principally through continuing use rather than
through a sale transaction.
b. If its carrying amount will be recovered through a sale rather than through continuing
use.
c. If the asset is sold after the end of the reporting period but before the financial
statements are authorized for use.
88. A noncurrent asset or disposal group is classified as held for sale if:
I. The asset or disposal group is available for immediate sale in its present condition
subject only to terms that are usual and customary
II. The sale is highly probable.
a. TRUE, TRUE
b. TRUE, FALSE
c. FALSE, TRUE
d. FALSE, FALSE
89. Assets classified as __________ in accordance with IAS 1 Presentation of Financial

Statements _________ they meet the criteria to be classified as held for sale in accordance
with IFRS 5.
a. Current; shall be reclassified as non-current assets if

b. Non-current; shall be depreciated if
c. Current; shall not be depreciated unless
d. Non-current; shall not be reclassified as current assets until
90. Under which circumstances shall an entity classify a non-current asset as held for sale?
a. If its carrying amount will be recovered principally through continuing use rather than
through a sale
b. If its carrying amount exceeds its market price
c. If its carrying amount will be recovered principally through a sale transaction rather
than through continuing use
d. If its sale price exceeds its carrying amount
91. Which among the following statements is incorrect?
a. Future operating losses from normal operations should not be recognized.

b. Only losses and expense that result from present obligations should be recognized.
c. If the actual disposal of a discontinued operation occurs in the same period that the
component is classified as held for sale, the gain or loss on disposal of discontinued
operations, is not the gain or loss on the disposal.
d. If the actual disposal of a discontinued operation occur in a subsequent period after
the component is classified as held for sale, the entity recognizes an estimated loss.
92. Which among the following costs is not a direct cost associated with the decision of
disposing a component?
a. Additional pension costs

b. Employee relocation expenses
c. Future rentals on long term leases
d. Advertising expenses
93. A discontinued operation is a component of an entity that either has been disposed of or
classified as held for sale and:
I. represents a major line of business or geographical area of operations

II. is part of a single coordinated plan to dispose of a separate major line of business or
geographical area of operations;
III. is a subsidiary acquired exclusively with a view to resale.
a. All statements are true.

b. None of the statements are true.
c. Only one of the statements is false.
d. Only one of the statements is true.
94. A discontinued operation occurs when two things happen:
I. A company eliminates or will eliminate the results of operations and cash flows of a
component of an entity from its ongoing operations.
II. There is a significant continuing involvement in that after its disposal.
a. All statements are false.

b. All statements are true.
c. One statement is false.
95. A noncurrent asset that is to abandoned shall not be classified as held for sale
because
a. The carrying amount is recovered primarily through continuing use.

b. It is difficult to value.
c. It is unlikely that the noncurrent asset is hold within twelve months.
d. It is unlikely that there is an active market for the noncurrent asset.
96. If the fair value less cost of disposal is lower than the carrying amount of a noncurrent
asset classified as held for sale, the difference is
a. Not accounted for

b. Accounted for as an impairment loss
c. Charged to depreciation
d. Debited to retained earnings
97. What is the treatment of any gain on a subsequent increase in the fair value less cost of
disposal of a noncurrent asset classified as held for sale?
a. The gain shall be recognized in full.

b. The gain shall not be recognized.
c. The gain shall be recognized but not in excess of the cumulative impairment loss
previously recognized.
d. The gain shall be recognized but only in retained earnings.
98. An entity moved to a new building. The old building is being actively marketed for sale
and the entity expects to complete the sale in four months.
a. It will be reclassified as an asset held for sale.

b. It will be classified as a current asset.
c. It will no longer be depreciated.
d. It will be measured at historical cost.
99. When a component of a business has been discontinued during the year, the loss on
discontinued operation should
a. Include operating loss of the current period.

b. Exclude operating loss during the period.
c. Be classified an extraordinary item.
d. Be classified an operating item.
100. When a component of a business has been discontinued during the year, the
component’s operating loss on discontinued operation should be included in
a. Income statement as part of revenue and expense

b. Income statement as part of the loss on the discontinued operations.
c. Income from discontinuing operations.
d. Retained earnings.
DISCONTINUED OPERATIONS PROBLEMS
A Building was originally acquired for P 400,000. Some years later, after cumulative
depreciation of P110,000 has been recognized, the building is classified as held for sale. At
the time of classification as held for sale:
Carrying amount is P290,000
Fair value less costs to sell P300,000
1. At what amount the property should be carried at on classification as held for sale?
a. 290,000 b. 300,000 c. 110,000 c. 50,000
2. At the next reporting date, if the property market has declined and fair value less costs to
sell is reassessed at P285, 000. At what amount should the property be carried?
a. 300,000 b. 15,000 c. 285,000 d. 290,000
A property is purchased for P 500,000 on 1 July 2011. The useful life of the property is 20
years (zero residual value). The property is measured subsequently at depreciated historical
cost.
On 30 December 2013, it is decided that the property is to be classified as held for sale
(classification criteria are met).
An impairment assessment on 30 December 2013 determines the recoverable value (based on

value in use) to be P 400,000.
The fair value less costs to sell on 30 December 2013 is P 390,000.
3. What is the carrying value of the property immediately before re-classification as held for
sale on 30 December 2013?
a. 400,000 b. 390,000 c. 10,000 d. 437,500
4. What are the required accounting entries in 2013 in respect of the re-classification of the
asset as held for sale?
a. Impairment loss (Expense) ………47,500
Property: Acc. Impairment loss ……….. 47,500
b. Asset held for sale……….43,000
Expense……………………….43,000
c. Impairment loss……………45,700
Acc. Impairment loss…….45,700
d. Asset held for sale……….40,500
Impairment loss……………40,500
5. MM Corporation designates one of its factories (subsidiary) as held for sale. At this point,
the Corporation must measure the subsidiary at the lower of its carrying amount or its fair
value less costs to sell. The carrying amount of the subsidiary is P2 billion. Its fair value
is P1.8 billion, and the costs to sell are P100,000,000. How much is an impairment loss?
a. 300,000,000 b. 200,000,000 c. 2Billion d.
50,000,000
6. Fortray Limited is planning to dispose a group of assets. The carrying value immediately
before this decision was $100,000. The fair value on reclassification is $90,000 and
estimated costs to sell are $10,000. What would be the carrying amount of the asset
immediately after reclassification?
a. $110,000
b. $100,000
c. $90,000
d. $80,000
A Limited is committed to disposing the plant of its XXX cash-generating unit. At 30

June 20.3, all criteria are met for the non-current asset to be classified as held for sale. On
31 December 20.3, the plant ceases to meet all the necessary criteria for classification as
‘held for sale’. Plant is carried under the cost model.
Details of the plant of the XXX cash-generating unit are as follows:
Cost - acquired 1 January 20.1 1 000,000

Depreciation rate (straight-line to nil residual value) 10%
At 30 June 20.3:
Fair value 700,000
Costs to sell 20,000
At 31 December 20.3:
Recoverable amount
• Scenario 1 720,000
• Scenario 2 690,000
7. What is the depreciation amount of P/L for six months?
a. 50,000
b. 45,000
c. 39,000
d. 69,000
8. What should be recognized as Impairment loss as a result of reclassified as held for sale?
a. 67,000
b. 70,000
c. 76,000
d. 90,000
9. What is the Reclassification of asset ‘held for sale’ to property, plant and equipment for
both scenarios?
a. 25,000;20,000
b. 78,000;43,000
c. 20,000;10,000
d. 45,000;12,000
10. An entity designates a group of assets as a disposal group. The carrying amount of these
assets before classification as a disposal group was $35M. upon being classified as held
for sale the assets were revalued to $33M on the basis of their fair value in accordance
with IAS16. The entity feels that it would cost $3M to sell the disposal group. What
would be the carrying amount of the disposal group in financial statements?
a. $33,000,000
b. $30,000,000
c. $2,000,000
d. $65,000,000
Alde Company purchased equipment for P 6,000,000 on January 1, 2019 with a useful life of
12 years and no residual On December 31, 2019. The entity classified the asset as held for
sale.
The fair value of the equipment on December 31, 2019 is P 5,000,000 and the cost of disposal
is P50,000.
On December 31, 2020, the fair value of the equipment is P 3,500,000 and the cost of
disposal is P100,000.
On December 31, 2020, the entity believed that the criteria for classification as held for sale
can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to
use it.
11. What is the impairment loss to be recognized on December 31, 2019?
a. 300,000
b. 450,000
c. 550,000
d. 600,000
12. What is the measurement of the equipment that ceases to be held for sale on December
31, 2020?
a. 4,000,000
b. 3,600,000
c. 3,400,000
d. 4,500,000
13. What amount should be recognized as gain or loss as a result of the reclassification in
2020?
a. 1,550,000 loss
b. 2,300,000 loss
c. 1,550,000 gain
d. 2,300,000 gain
14. Edjohn company has correctly classified the packaging operation as a disposal group held
for sale and as a discontinued operation.
For the year ended December 31,2019, this disposal group incurred trading loss after tax
of P3,000,000 and the loss on remeasuring to fair value less cost of disposal was
P1,700,000.
What total amount of the disposal group’s losses should be included in profit or loss for
the year ended December 31, 2019?
a. 4,700,000
b. 1,300,000
c. 2,000,000
d. 0
15. In 2019, Eudora Company decided to discontinue the Electronics Division. On December
31, 2019, the division has not been completely sold. However it is probable that the
disposal will be completed within a year.
Analysis of the records for the year disclosed the following information relative to the
electronics division.
Operation loss for 2019 7,000,000
Loss on disposal of some assets during 2019 500,000
Expected operation loss in 2020 preceding final disposal 2,000,000
Expected gain in 2020 on disposal of division 4,000,000
What amount should be reported as pretax loss from discontinued operation in 2019?
a. 9,500,000
b. 7,500,000
c. 6,500,000
d. 2,500,000
16. On October 1, 2019, Minotaur Company approved a formal plan to sell a business
segment. The sale will occur on March 31, 2020. The segment had income of P2,000,000
from January 1to September 30 and P500,000 for the quarter ended December 31, 2019.
On December 31, 2019, the carrying amount of the assets of the segment was 4,000,000
and the fair value less cost of disposal was P3,500,000. The income tax rate is 30%.
What amount should be reported as income from the discontinued segment for 2019?
a. 1,400,000
b. 1,300,000
c. 4,500,000
d. 1,250,000
Aldous Company accounts for noncurrent assets using the revaluation model, on june 30,
2019, the entity classified a land as held for sale.
At that date, the carrying amount was P2,900,000 and the balance of the revaluation surplus
was P200,000
On june 30, 2019, the fair value was estimated at 3,300,000 and at the cost of disposal at
P200,000.
On December 31, 2019, the fair value was estimated at P3,250,000 and the cost of disposal at
P250,000.
17. What is the adjusted Carrying Amount of the land on June 30, 2019?
a. 3,100,000
b. 3,300,000
c. 2,700,000
d. 3,000,000
18. What is the adjusted carrying amount of the Land on December 31, 2019?
a. 3,400,000
b. 3,200,000
c. 3,000,000
d. 3,250,000
19. What total amounts should be reported as Impairment loss for 2019?
a. 100,000
b. 300,000
c. 400,000
d. 50,000
20. Lancelot Company Purchased an equipment for 5,000,000 on January 1, 2016. The
equipment had a useful life for 5 years with no residual value. On December 31, 2016, the
entity classified the asset as held for sale. On such date, the Fair Value less cost of
disposal of the equipment was P3,500,000.
On December 31, 2017, the entity believed that the criteria for classification as held for
sale can no longer be met. Accordingly, the entity decided not to sell the asset but to
continue to use it. On December 31, 2017, the fair value less cost of disposal of the
equipment was 2,700,000.
What amount of impairment loss should be recognized in 2016?
a. 1,500,000
b. 1,000,000
c. 500,000
d. 0
An item of plant, measured using the cost model, has a carrying amount of 80,000 pesos
(cost:100 000 and accumulated depreciation: 20,000) on 1 January 2013 on which date all
criteria for separate classification as a ‘non-current asset held for sale are met.
21. What are the journal entries relating to the reclassification of the plant assuming that
the fair value is 70, 000 pesos and the expected costs to sell are 5, 000 on 1 January
2013;
-a. Impairment loss (expense) 15 000
- Plant: accumulated impairment loss 15 000
b. Impairment loss (expense) 14 000

c. Impairment loss (expense) 13 000

on 30 June 2013 (6-months later), the fair value is 70000 and expected costs to sell
are 2,000 pesos;
a. Plant: accumulated impairment loss 3 000

Impairment loss reversed (income) 3 000
b. Plant: accumulated impairment loss 2 000
c. Plant: accumulated impairment loss 4 000
on 30 June 2013 (6-months later), the fair value is 90,000 pesos and expected costs to
sell are 5,000 pesos.
-a. Plant: accumulated impairment loss 15 000
An item of plant, measured using the cost model (at historical carrying amount), has a
carrying amount of 80 000 (cost 100 000) on 1 January 2013 on which date all criteria for
separate classification as a ‘non-current asset held for sale’ are met. This asset had previously
been impaired by 3 000 this is the balance on the accumulated impairment loss account.
24. Show the journal entries relating to the reclassification of the plant assuming that the
fair value is 70 000 and the expected costs to sell are 5,000 on 1 January 2013;
A. -Impairment loss (expense) 15 000
Plant: accumulated impairment loss 15 000
B. Impairment loss (expense) 16 000
C. Impairment loss (expense) 17 000
25. Show the journal entries relating to the reclassification of the plant assuming that 6
months later, on 30 June 2013, the fair value i s 70,000 and the expected costs to sell
are 2 000;
A. -Plant: accumulated impairment loss 3 000
B. Plant: accumulated impairment loss 4 000
C. Plant: accumulated impairment loss 5 000
26. Show the journal entries relating to the reclassification of the plant assuming that 6
months later, on 30 June 20X3, the fair value is 90 000 and the expected costs to sell
are 5,000.
A. Plant: accumulated impairment loss 18 000
B. Plant: accumulated impairment loss 19 000
C. Plant: accumulated impairment loss 20 000
An item of plant, measured using the cost model (i.e. at historical carrying amount), has a
carrying amount of C70 000 (cost 100 000) and a tax base of C90 000 on 1 January 2013 on
which date all criteria for separate classification as a ‘non-current asset held for sale’ are met.
The fair value less costs to sell on this date is 65,000. This asset had not previously been
Impaired. The tax authorities allow a deduction of 10% on the cost of this asset. The tax rate
is 30%. The profit before tax is correctly calculated to be C200 000. There are no temporary
or permanent differences other than those evident from the information provided.
27. What is the current normal tax payable and the deferred tax balance at 31 December
2013?
a. 58 500
b. 58 580
c. 58 250
28. What is the Journal entry of the current normal tax and the deferred tax for the year
ended 31 December 2013.
a. -Tax expense 58 500

Current tax payable (liability) 58 500
Tax expense 1 500
Deferred tax (liability) 1 500
b. Tax expense 53 500
Tax expense 1 500
c. Tax expense 54 500
Tax expense 1 500
An item of plant, revalued to fair value using the revaluation model, met all criteria for
classification as ‘held for sale’ on 1 January 2014. The following information is relevant:
Cost: 100 000 (purchased 1 January 2011)
Depreciation: 10% per annum straight-line to nil residual values.
Fair value: 120 000 (revalued 1 January 2013).
Revaluations are performed using the net replacement value method
Show all journal entries relating to the reclassification as ‘held for sale’ assuming that:
29. Show all journal entries relating to the reclassification as ‘held for sale’ assuming that
the fair value is 100 000 and the expected selling costs are 9 000 on 1 January 2014;
a. Plant: accumulated depreciation and impairment losses 15 000
Plant: cost 15
000
Revaluation surplus FV: C100 000 – Carrying amount: C105 000 5 000
Plant: cost 5
000
Impairment loss (selling costs) (expense) 9 000
Plant: accumulated depreciation and
impairment losses 9
000
b. Plant: accumulated depreciation and impairment losses 15 000
Plant: cost 15
000
c. Revaluation surplus FV: C100 000 – Carrying amount: C105 000 5 000
Plant: cost 5
000
impairment losses 9 000
30. Show all journal entries relating to the reclassification as ‘held for sale’ assuming that
the fair value is 150 000 and the expected selling costs are 20 000 on 1 January 2014.
Plant: cost 15 000
Plant: cost 45 000
Revaluation surplus 45 000

Plant: accumulated depreciation
and impairment losses 20 000
Plant: cost 15
000
c. Impairment loss (selling costs) (expense) 20 000
31. The fair value is 60 000 and the expected selling costs are 20 000 on 1 January 2014.
Plant: cost 15 000
Revaluation surplus (ACA: 105 000 – HCA: 70 000) 35 000
Impairment loss (HCA: 70 000 – FV: 60 000) 10 000
Plant: cost 35 000
Plant: accumulated depreciation and impairment losses 10 000

Plant: cost 15
000
Revaluation surplus (ACA: 105 000 – HCA: 70 000) 35
000
Impairment loss (HCA: 70 000 – FV: 60 000)
10 000
An item of plant, revalued to fair value using the revaluation model, met all criteria for
classification as ‘held for sale’ on 1 January 2014. The following information is relevant:
Cost: 100 000 (purchased 1 January 2011)
Depreciation: 10% per annum straight-line to nil residual values.
Fair value: 120 000 (revalued 1 January 2013).
Revaluations are performed using the net replacement value method
The ‘fair value less costs to sell’ on 1 January 20X4 was as follows:
• Fair value (1 January 20X4): 100 000; and
• Expected selling costs (1 January 20X4): 9 000.
32. Show all journal entries relating to the re-measurement of the ‘non-current asset held
for sale’ on 30 June 2014 assuming that on the 30 June 2014 the fair value is 110 000
and the expected selling costs are 15 000;
Impairment loss reversed (income) 4
000
c. Plant: accumulated depreciation and impairment losses 6 000
33. Show all journal entries relating to the re-measurement of the ‘non-current asset held
for sale’ on 30 June 2014 assuming that on the 30 June 2014. The fair value is 110
000 and the expected selling costs are 3 000;
a. Plant: accumulated impairment loss 9 000
Reversal of impairment loss (income) 9 000
34. . Show all journal entries relating to the re-measurement of the ‘non-current asset held
for sale’ on 30 June 2014 assuming that on the 30 June 2014The fair value is 90 000
and the expected selling costs are 3 000.
a. Impairment loss (expense) 4 000
b. Impairment loss (expense) 3 000

c. Impairment loss (expense) 2 000

(Problem 15-17)
On December 31, 20x1, Paul Co. classified its building with a historical cost of
1,000,000 and accumulated depreciation of 600,000 as held for sale. All of the criteria
under pfrs 5 are complied with. On the date, the land has a fair value of 350,000 and cost
to sell of 20,000.
35. What is the carrying amount on Dec. 31, 20x1?
a. 400,000
b. 600,000
c. 700,000
d. 8800,000
36. What is the fair value less cost to sell?
a. 330,000
b. 320,000
c. 340,000
d. 350,000
37. What is impairment loss?
a. 70,000
b. 80,000
c. 90,000
d. 100,000
On December 31, 20x1 Kurtney Co. classified its building with a carrying amount of 400,000
and fair value less cost to sell of 330,000 as held for sale. Impairment loss of 70,000 was
recognised on that date. The building has a remaining useful life of 4 years and it was
depreciated using straight line methond.
As of December 31, 20x2, the building was not et sold and management decided not to sell
the building anymore. The fair value less cost to sell of the building on December 32,20x2 is
310,000 while the value in use is 305,000.
38. What the carrying amount before classification is as held for sale
a. 400,000
b. 450,000
c. 456,000
d. 670,000
39. What is the depreciation in 20x2 not recognized because building is classified as held
for sale?
a.100,000
b. 200,000
c.150,000
d. 175,000
40. What is the loss on reclassification
a. 30,000
b. 35,000
c. c.40,000
d. d.45,000
Mobile Legends Company purchased equipment for P3, 000,000 on January 1, 2015 with a
useful life of 10 years and no residual value. On December 31, 2015, the entity classified the
asset as held for sale.
The fair value of the equipment on December 31, 2015 is P2, 200,000 and the cost of disposal
is P30, 000.
On, December 31, 2016, the fair value of the equipment is P1, 500,000 and the cost of
disposal is P100, 000.
can no longer be met.
Accordingly, the entity decided not to sell the asset but to continue to use it.

a. 530, 000
b. 1, 300,000
c. 500, 000
d. 300, 000
42. What is the measurement of the equipment that ceases to be held for sale on December
31, 2016?
a. 0
b. 1, 400,000
c. 2, 170,000
d. 2, 400,000
43. What amount should be recognized as gain or loss as a result of the reclassification in
2016?
a. 770, 000 loss
b. 770, 000 gain
c. 1, 300,000 loss
d. 1, 300,000 gain
On May 1, 2018, Dart Company had a machine with a cost of P1, 000,000 and accumulated
depreciation of P750, 000.
On May 1, 2018, the entity classified the machine as held for sale and decided to sell the
machine within one year.
On May 1, 2018, the Machine had an estimated selling price of P100, 000 and a remaining
useful life of two years.
It is estimated that the disposal cost of the machine will be 10, 000.
On December 31, 2018, the estimated selling price of the machine had increased to P150, 000
with estimated disposal cost of P20, 000.
44. What is the impairment loss to be recognized on May 1, 2018?

a. 150, 000
b. 160, 000
c. 120, 000
d. 250, 000
45. What amount should be recognized as gain on reversal of impairment on December 31,
2018?
a. 40, 000
b. 160, 000
c. 30, 000
d. 130, 000
Bibi Company accounted for noncurrent assets using the cost model. On October 1, 2015, the
entity classified a noncurrent asset as held for sale.
At that date, the carrying amount was P10, 200,000, the fair value was estimated at P8,
200,000 and the cost of disposal at P500, 000.
On December 15, 2015, the asset was sold for net proceeds of P2 ,350,000.
46. What amount should be included as an impairment loss in the statement of

comprehensive income for the year ended December 31, 2015?
a. 2, 500,000
b. 2, 350,000
c. 7, 700,000
d. 8, 200,000
Pagsure Company accounted for noncurrent assets using the revaluation model. On
September 1, 2015, the entity classified a land as held for sale.
At that date, the carrying amount of the land was P10, 000,000 and the balance in the
revaluation surplus was P3, 500,000.
At the same date, the fair value of the land was estimated at P11, 500,000 and the cost of
disposal at P500, 000.
On December 31, 2015, the fair value less cost of disposal of the land did not change. The
land was sold on January 31, 2015 for 12, 000,000.
47. What is the impairment loss in 2015?

a. 11, 000,000
b. 100, 000
c. 500, 000
d. 6, 500,000
48. What is the adjusted carrying amount of the land on December 31, 2015?
a. 11, 000,000
b. 11, 500,000
c. 12, 000,000
d. 3, 000,000
49. What amount should be reported as gain on disposal of land in 2015?

a. 2, 000, 000
b. 1, 000,000
c. 500, 000
d. 12, 000,000
50. What amount of OCI is reclassified to retained earnings in 2015?

a. 500, 000
b. 2, 000,000
c. 1, 000,000
d. 5, 000,000
On July 1, 2015, Granger Company approved a plan to dispose of a business segment. It is
expected that the sale will occur on May 1, 2016.
On December 31, 2015, the carrying amount of the assets of the segment was 5, 000,000 and
the fair value less cost of disposal was 3, 800,000.
During 2015, the entity paid employee severance and relocation costs of 200, 000 as a direct
result of the discontinued operation.
The revenue and expenses of the discontinued segment during 2015 were:
Revenue Expenses
January 1 to June 30 3, 500,000 4, 000,000

July 1 to December 31 1, 200,000 1, 400,000
51. What amount should be reported as pretax loss from the discontinued segment for 2019?
a. 1, 200,000
b. 2, 000,000
c. 2, 100,000
d. 700, 000
On October 1, 2010, Xanti Company approved a formal plan to sell a business segment. The
sale will occur on March 31, 2011. The segment had income of P4, 500,000 from January 1
to September 30 and P1, 500,000 for the quarter ended December 31, 2010.
On December 31, 2010, the carrying amount of the assets of the segment was P 7, 000,000
and the fair value less cost of disposal was 4, 500,000. The income tax rate is 30%.
52. What amount should be reported as income from the discontinued segment for 2010?
a. 3, 500,000
b. 2, 450,000
c. 1, 050, 000
d. 2, 500,000
Land of Dawn Company had two divisions, North and South, in 2018, the entity decided to
dispose of the assets and liabilities of Division South and it is probable that the disposal will
be completed early next year. The revenue and expenses are as follows:
2018
2017
Sales-North 8, 000,000 7, 600,000
Total nontax expenses-North 7, 400,000 7, 100,000
Sales-South 6, 500,000 8, 100,000
Total nontax expenses-South 6, 900,000 7, 500,000
During the later part of 2018, the entity disposed of a portion of Division South and
recognizes a pretax loss of P3, 000,000 on the disposal. The income tax rate is 30%.
53. What amount should be reported as loss from discontinued operation in 2018?
a. 400, 000
b. 3, 400,000
c. 2, 380,000
d. 2, 400,000
On October 30, 2018 when the carrying amount of a major subsidiary was P60, 000,000,
Vale Company signed a legally binding contract to sell the subsidiary. The sale is expected to
be completed by January 31, 2019 at a selling price of P62, 000,000.
In addition, prior to January 31, 2019 the sale contract obliged the entity to terminate the
employment of certain employees of the business segment incurring an expected termination
cost of P4, 000,000 to be paid on June 30, 2019.
The segment’s revenue and expenses for 2018 were P30, 000,000 and P39, 000,000
respectively. The income tax rate is 30%.
54. What amount should be reported as loss from discontinued operation for 2018?
a. 9, 000,000
b. 13, 000,000
c. 9, 100,000
d. 4, 000,000
Bruno Company operates two stores, one in Lavista and one in Golf. During 2018, the entity
decided to close the store in Golf and sell the property. It is probable that the disposal will be
completed early next year.
The revenue and expenses for 2018 and for the preceding two years are as follows:
2018 2017
2016
Sales-Lavista 70,000 58,000 50,000
Cost of goods sold- Lavista 36,000 32,000 28,000
Other expenses- Lavista 24,000 33,000 22,000
Sales- Golf 34,000 50,000 62,000
Cost of goods sold- Golf 24,000 29,000 30,000
Other expenses – Golf 27,000 26,000 25,000
During the later part of 2018, the entity sold much of the kitchen equipment of the Dakak
restaurant and recognized a pretax gain of P25,000 on the disposal. The income tax rate is
30%.
55. What amount should be reported as income or loss from discontinued operation for 2018?
a. 5, 600
b. 2, 400
c. 8, 000
d. 25, 000
Sun Company committed to sell the comic division, a component of the business, on August
1, 2015.
The carrying amount of the division was P8, 000,000 and the fair value was P6, 500,000.
The disposal date is expected on June 1, 2019. The division reported an operating loss of
P500, 000 for the year ended December 31, 2015.
56. What amount should be reported as pretax loss from discontinued operation in 2015?
a. 0
b. 2, 000,000
c. 1, 500,000
d. 500. 000
Eudora Company decided on July 1, 2015 to dispose of a component of business. The

component was sold on October 31, 2015.
The net income for the current year included income of P10, 000,000 from operating the
discontinued segment from January 1 to the date of disposal. The entity incurred a loss on the
November 30 sale of P6, 500,000.
57. What amount should be reported as pretax income or loss from discontinued operation for
2015?
a. 10, 000,000 loss
b. 5, 000,000 income
c. 3, 500,000 income
d. 3, 500,000 loss
In 2015, Lightborn Company decided to discontinue the Electronics Division; a separately

indentifiable component of Lightborn’s business, on December 31, 2015, the division had not
been completely sold.
However, negotiations for the final and complete sale are progressing in a positive manner
and it is probable that the disposal will be completed within a year.
Analysis of the records for the year disclosed the following relative to Electronics Division:
Operating loss for the current year 10, 000,000

Loss on disposal of some electronics division assets
during 2015 700, 000
Expected operating loss in 2016 preceding final disposal 3, 000,000
Expected gain in 2016 on disposal of division 4, 000,000
a. 4, 000,000
b. 3, 000,000
c. 10, 000,000
d. 10, 700,000
On December 31, 2015, Laagan Company committed to a plan to discontinue the operations
of walking shorts division.
The fair value of the facilities was P5, 000,000 less than carrying amount on December 31,
2015.
The division’s operating loss for 2015 was P7, 000,000 and the division was actually sold for
P5, 200,000 less than carrying amount in 2016.
The entity estimated that the division’s operating loss for 2016 would be P1, 000,000.
a. 7, 000,000
b. 1, 800,000
c. 5, 200,000
d. 1, 000,000
60. Gatotkaca Company, a parent entity, approved on December 1, 2015 a plan to sell a
subsidiary. The sale is expected to be completed on April 30, 2015.
The year-end is December 31, 2015 and the financial statements were approved on April 1,
2015.
The subsidiary had net assets with carrying amount of P20, 000,000 including goodwill of
P2, 500,000 on December 31, 2015.
The subsidiary made a loss of P10, 000,000 from January 1 to April 1, 2015 and is expected
to make a further loss of P8, 000,000 up to the date of sale.
At the date of approval of the financial statements, the entity was in negotiation for the sale of
the subsidiary but no contract had been signed.
The entity expected to sell the subsidiary for P13, 000,000 and to incur cost of disposal of
P1, 500, 000.
The value in use of the subsidiary was estimated to be P12, 000,000.
On December 31, 2015, what is the measurement of the subsidiary which is considered as a
disposal group classified as held for sale?
a. 11, 000,000
b. 11, 500,000
c. 10, 000,000
d. 10, 500,000
Bajaj Company accounted for noncurrent assets using the cost model. On August 1,
2018, the entity classified a noncurrent asset as held for sale.
At that date, the carrying amount was P2,500,000, the fair value was estimated at P
1,800,000 and the cost of disposal at P500,000.
On November 15, 2018, the asset was sold for net proceeds of P1,650,000.
61. What amount should be included as an impairment loss in the statement of comprehensive
income for the year ended December 31, 2018?
a. 2,350,000
b. 1,200,000
c. 1,650,000
d. 850,000
62. What should be included as loss on disposal in the statement of comprehensive income for
the year ended December 31, 2018?
a. 350,000
b. 700,000
c. 650,000
d. 300,000
On January 1, 2016, Chimon Company purchased land at a cost of P6,000,000. The entity
used the revaluation model for this asset.
The fair value of the land was P7,000,000 on December 31, 2016 and P9,850,000 on
December 31, 2017.
On July 1, 2018, the entity decided to sell the land and therefore classified the asset as held
for sale.
The fair value of the land on this date is P8,200,000. The estimated cost of disposal is very
minimal.
On December 31, 2018, the land was sold for P9,000,000.
63. What amount in OCI should be recognized in the statement of comprehensive income for the
year ended December 31, 2017?
a. 3,850,000
b. 2,850,000
c. 1,000,000
d. 1,200,000
64. What amount of gain or loss on sale of land is recognized in 2018?

a. 1,000,000 gain
b. 500,000 loss
c. 800,000 gain
d. 400,000 loss
On May 1, 2018, Nanon Company had a machine with a cost of P4,000,000 and accumulated
depreciation of P2,950,000.
On May 1, 2018, the entity classified the machine as held for sale and decided to sell the
On May 1, 2018, the machine had an estimated selling price of P500,000 and a remaining
useful life of 2 years.
It is estimated that selling cost associated with the disposal of the machine will be P60,000.
On December 31, 2018, the estimated selling price of the machine had increased to P850,000
with estimated selling cost of P120,000.
65. What amount of impairment loss should be recognized in 2018?

a. 850,000
b. 300,000
c. 420,000
d. 610,000
2018?
a. 440,000
b. 730,000
c. 290,000
d. 300,000
Scrubb Company accounted for noncurrent assets using the revaluation model. On September
1, 2018, the entity classified a land as held for sale.
At that date, the carrying amount of the land was P7,000,000 and the balance in the
revaluation surplus was P3,500,000.
At same date, the fair value of the land was estimated at P7,500,000 and the cost of disposal
at P300,000.
On December 31, 2018, the fair value less cost of disposal of the land did not change. The
land was sold on January 31, 2019 for P8,000,000.

a. 300,000
b. 500,000
c. 400,000
d. 0
a. 3,500,000
b. 2,500,000
c. 7,200,000
d. 8,000,000

a. 1,300,000
b. 500,000
c. 800,000
d. 2,000,000
70. What amount of OCI is reclassified to retained earnings in 2019?

a. 1,500,000
b. 2,000,000
c. 3,000,000
d. 800,000
Pioneer Company purchased equipment for P6,000,000 on January 1, 2018 with a useful life
of 10 years and no residual value.
On December 31, 2019, the entity classified the equipment as held for sale. The fair value of
the equipment on December 31, 2019 was P4,500,000 and the cost of disposal was P400,000.
On December 31, 2020, the fair value of the equipment was P4,800,000 and the cost of
disposal was P500,000. The value in use was determined to be P4,500,000.
can no longer be met.
Accordingly, the entity decided not to sell the asset but to continue to use it.

a. 700,000
b. 800,000
c. 900,000
d. 500,000
72. What is the measurement of the equipment that ceases as held for sale on December 31,
2020?
a. 4,300,000
b. 3,200,000
c. 4,200,000
d. 4,800,000
73. What amount should be recognized in profit or loss as a result of the reclassification in 2020?
a. 300,000
b. 100,000
c. 500,000
d. 400,000
Everything Company committed to sell the magazines division, a component of the business,
on August 1, 2018.
The carrying amount of the division was P3,000,000 and the fair value was P2,500,000.
The disposal date is expected on May 1, 2019. The division reported an operating loss of
P300,000 for the year ended December 31, 2018.
a. 200,000
b. 500,000
c. 300,000
d. 800,000
Graham Company decided on September 1, 2018 to dispose of a component of business. The

component was sold on November 30, 2018.
The net income for the current year included income of P5,000,000 from operating the
discounted segment from January 1, to the date of disposal. The entity incurred a loss on the
November 30 sale of P4,000,000.
75. What amount should be reported as pretax income or loss from discontinued operations for
2018?
a. 1,000,000 income
b. 500,000 loss
c. 500,000 income
d. 800,000 loss
Blacklist Company had two operating divisions, one manufactures machinery and the other
sells seashells. Both divisions are considered separate components.
The seashells division has been unprofitable and on October 11, 2018, the entity adopted a
formal plan to sell the division. At December 31, 2018, the component was considered held
for sale.
A sale was completed on April 30, 2019.
On December 31, 2018, the carrying amount of the assets of the seashells was P4,000,000.
On that date, the fair value of the assets less cost of disposal was P3,000,000.
The before-tax operating loss of the division for the year was P1,500,000.
The after tax income from continuing operations for 2018 was P6,000,000. The income tax
rate is 30%.
76. What is the loss from discontinued operation?
a. 2,500,000
b. 3,000,000
c. 1,750,000
d. 500,000
77. What is the net income for 2018?

a. 4,250,000
b. 1,750,000
c. 6,250,000
d. 2,500,000
The Gifted Company has two divisions, East and West. Both qualify as business
components.
In 2019, the entity decided to dispose of the assets and liabilities of Division West and it is
probable that the disposal will be completed early next year.
The revenue and expenses of The Gifted Company are as follows:
2019 2018
Sales – East 6,000,000 5,500,000
Total nontax expenses – West 4,500,000 4,000,000
Sales – West 3,000,000 5,000,000
Total nontax expenses – West 4,200,000 4,900,000
During the later part of 2019, the entity disposed of a portion of division West and recognized a
pretax loss of P3,000,000 on the disposal.
a. 1,200,000
b. 2,800,000
c. 4,200,000
d. 1,800,000
On December 31, 2018, Kisses Company committed to a plan to discontinue operations of

Cosmetics division.
The fair value of the facilities was P1,200,000 less than carrying amount on December 31, 2018.
The division’s operating loss for 2018 was P2,500,000 and the division was actually sold for
P1,500,000 less than carrying amount in 2019.
The entity estimated that the division’s operating loss for 2019 would be P800,000.
a. 1,300,000
b. 1,000,000
c. 800,000
d. 2,500,000
Operating loss for the current year 6,000,000

Loss on disposal of some electronics division assets during 500,000
2018
Expected operating loss in 2019 preceding final disposal 1,500,000
Expected gain in 2019 on disposal of division 2,000,000
80. Based on the table, what amount should be reported as pretax loss from discontinued
operation in 2018?
a. 8,000,000
b. 6,500,000
c. 1,500,000
d. 5,500,000
Irog Co. accounted for noncurrent assets using the cost model. On October 1, 2017, the entity
classified a noncurrent asset as held for sale.
At that date, the carrying amount was P3,200,000, the fair value was estimated at P2,200,000
and the cost of disposal at P200,000.
On December 15, 2017, the asset was sold for net proceeds of P1,850,000.
81. What amount should be included as an impairment loss in the statement of

comprehensive income for the year ended December 31, 2017?
a. 1,000,000
b. 1,200,000
c. 1,350,000
d. 0
Darling Co accounted for noncurrent assets using the cost model. On October 30, 2017 the
entity classified a noncurrent asset as held for sale.
At that date, the carrying amount was P1,500,00, the fair value was estimated at P1,100,00
and the cost of disposal at P150,000.
On November 20,2017, the asset was sold for net proceeds of P800,000.
82. What amount should be reported as impairment loss for 2017?
a. 550,000
b. 400,000
c. 700,000
d. 0
83. What amount should be included as loss on disposal in the statement of comprehensive
income for the year ended December 31, 2017?
a. 550,000
b. 700,000
c. 150,000
On January 1, 2017, Domi Company purchased land at a cost of P6,000,000. The entity used
the revaluation model for this asset.
The fair value of the land was P7,000,000 on December 31, 2017 and P8,500,000 on
December 31,2018.
On July 1, 2019, the entity decided to sell the land and therefore classified the asset as held
for sale.
The fair value of the land at this date is P7,600,000. The estimated cot of disposal is very
minimal.
On December 31, 2019, the land was sold for P8,000,000.
84. What amount in OCI should be recognized in the statement of comprehensive income for
the year ended December 31,2018?
a. 2500000
b. 1500000
c. 900000
d. 400000
85. What amount of gain or loss on sale of land is recognized in 2019?
a. 2000000 gain
b. 1000000 gain
c. 400000 gain
d. 300000 loss
Malo Co. accounted for noncurrent assets using the revaluation model. On October 1, 2017,
the entity classified a land as held for sale.
At that date, the carrying amount of the land was P5000000 and the balance in revaluation
surplus was P1500000.
At the same date, the fair value of the land was estimated at P5500000 and the cost of
disposal at P100000.
On December 31,2017, the fair value less cost of disposal of the land did not change. The
land was sold on January 31, 2018 for P600,000.
a. 100000
b. 500000
c. 400000
d. 0
a. 5000000
b. 5500000
c. 5400000
d. 3500000
a. 1000000
b. 2600000
c. 500000
d. 600000
89. What amount of OCI I reclassified to retained earnings in 2018?
a. 1500000
b. 2000000
c. 500000
d. 0
On April 1, 2017, Bebe Co. had a machine with a cost of P5000000 and accumulated
depreciation of P3750000.
On April 1,2017, the entity classified the machine as held for sale and decided to sell the
On April 1, 2017, the machine had an estimated selling price of P500000 and a remaining
useful life of 2 years.
It is estimated that selling cost associated with the disposal of the machine will be P50000.
On December 31, 2017, the estimated selling price of the machine had increased to P750000
with estimated selling cost of P100000.
a. 1250000
b. 800000
c. 750000
d. 0
2017?
a. 468750
b. 368750
c. 300000
d. 200000
Why Can’t You Hold Me Industry purchased equipment for P5000000 on January 1, 2017.
The equipment had a useful life of 5 years with no residual value.
On December 31, 2017, the entity classified the equipment as held for sale. On such date, the
fair value less cost of disposal of the equipment was P3500000.
can no longer be met. Accordingly, the entity decided not to sell the equipment but to
continue to use it.
On December 31, 2018, the fair value less cost of disposal of the equipment was P2700000.
92. What is the carrying amount of the equipment on December 31, 2017 before classification
as held for sale?
a. 5000000
b. 4000000
c. 3500000
d. 4500000
a. 1500000
b. 1000000
c. 500000
d. 0
94. What amount should be included in profit or loss in 2018 as a result of the reclassification
of the equipment to property, plant and equipment?
a. 800000 gain
b. 800000 loss
c. 300000 gain
d. 300000 loss
95. What I the adjusted carrying amount of the equipment on December 31, 2019?
a. 2700000
b. 1800000
c. 2000000
d. 3000000
Boo Co. committed to sell the comic book division, a component of the business , on
September 1, 2017.
The carrying amount of the division was P4000000 and the fair value was P3500000.
The disposal date is expected on June 1, 2018. The division reported an operating loss of
P200000 for the year ended December 31, 2017.
96. Before income tax, what amount should be reported as loss from discontinued operation
in 2017?
a. 500000
b. 200000
c. 700000
d. 0
Katin Co. decided on August 1, 2o17 to dispose of a component of business . The component
was sold on November 30, 2017.
The net income for the current year included income of P5000000 from operating the
discontinued segment from January 1 to the date of disposal. The entity incurred a loss on the
November 30 sale of P4500000.
97. What amount should be reported as pretax income or loss from discontinued operation for
2017?
a. 4500000 loss
b. 5000000 income
c. 500000 loss
d. 500000 income
On December 1, 2017, Ikawat Co. committed to plan to dispose of a business component’s

assets. The disposal met the requirements to be classified as discontinued operation.
On that date, the entity estimated that the loss from disposition of the assets would be
P700000 and the component’s operating loss was P200000.
98. Before income tax, what amount of loss should be reported for discontinued operation for
2017?
a. 900000
b. 200000
c. 700000
BB Co. correctly classified the packaging operation as a disposal group held for sale and as
discontinued operation.
For the current year, this disposal group incurred trading loss of P2000000 after tax and the
loss on remeasuring it to fair value less cost of disposal was P1500000.
99. What total amount of the disposal group’s losses should be included in profit or loss for
the current year?
a. 3500000
b. 2000000
c. 1500000
d. 0
LJS trading reported the following data for the current year:
Income from continuing operations 700000
Net Income 500000
Selling and administrative expenses 2250000
Income before tax 1000000
100. What amount should be reported as income or loss from discontinued operations?
a. 700000 income
b. 500000 loss
c. 100000 loss
d. 200000 loss
ANSWER KEY:

DISCONTINUED OPERATIONS THEORIES
1. C
2. D
3. D
4. D
5. C
6. D
7. A
8. D
9. D
10. D
11. A
12. B
13. B
14. A
15. C
16. D
17. A
18. C
19. C
20. B
21. A
22. D
23. B
24. D
25. C
26. A
27. C
28. A
29. C
30. B
31. C
32. A
33. D
34. D
35. B
36. A
37. C
38. B
39. B
40. D
41. B
42. C
43. A
44. D
45. C
46. D
47. C
48. B
49. B
50. D
51. A
52. D
53. D
54. A
55. A
56. D
57. B
58. D
59. D
60. D
61. A
62. A
63. A
64. D
65. D
66. A
67. A
68. D
69. A
70. D
71. A
72. A
73. A
74. A
75. A
76. A
77. A
78. A
79. A
80. A
81. C
82. A
83. A
84. B
85. B
86. D
87. A
88. A
89. A
90. D
91. A
92. D
93. A
94. C
95. D
96. A
97. B
98. C
99. D
100. A
ANSWER KEY:

DISCONTINUED OPERATIONS PROBLEMS
1. A.
At lower of carrying cost and FMVLCS. Hence, it is a comparison between P 290,000 and P
300,000. Accordingly, the answer is at P 290,000.
2. C.
A comparison between P 290,000 and P 285,000. Same guiding rule applies. Hence, at
P285,000.
3. D
Carrying amount before reclassification at Dec. 31, 2013.
= Cost – Depreciation (2011, 2012 & 2013 (only six months))
= P 500,000 – (25,000 – 25,000 – 12,500)
= P 437,500
4. A.
Impairment loss (Expense) ………47,500
Property: Acc. Impairment loss ……….. 47,500
5. A.
(1,800,000,000-100,000)= 1,700,000,000
(2,000,000,000-1,700,000,000)= 300,000,000
6. D.
The asset should be classified at the lower of the carrying amount and net realizable value. In
this case:
Carrying amount = $100,000
Net realizable value = $90,000 – $10,000 = $80,000
7. A.
6/12 months x 10% x P1000 000 cost= P50,000
8. B
(1 000 000 x 7.5/10 years) – (700 000 fair value – 20 000 costs to sell = 680 000)
= P70,000
9. C
{1 000 000 x 7/10 years) – 680 000 old)
= Scenario 1 20,000
(690 000 recoverable amount – 680 000 old)
=Scenario 2 10,000
10. B
33,000,000-3,000,000= $30,000,000
11. C
6,000,000/12yrs*1= 500,000 Accumulated Depreciation
6,000,000-500,000=5,500,000
5,000,000-50,000= (4,950,000)
550,000 Impairment loss
12. C
3,500,000-100,000=3,400,000
13. A
4,950,000-3,900,000=1,550,000 LOSS
14. A
Trading loss after tax 3,000,000
Fair value less cost of disposal 1,700,000
4,700,000
15. B
Operation loss for 2019 7,000,000
Loss on disposal of some assets during 2019 500,000
7,500,000
16. A
2,000,000+500,000=2,500,000 beginning income
carrying amount of the assets of the segment 4,000,000
fair value less cost of disposal 3,500,000
500,000 loss
Beginning income 2,500,000
(500,000)
2,000,000
.70
1,400,000
17. A
June 30, 2019 FV 3,300,000
Cost of Disposal (200,000)
3,100,000
18. C
December 31, 2019 FV 3,250,000
Cost of Disposal (250,000)
3,000,000
19. A
3,000,000
(2,900,000)
100,000
20. C
December 31, 2016 Carrying Amount 5,000,000*4/5= 4,000,000
Fair Value COD 3,500,000
Impairment Loss 2016 500,000
21. If carrying amount > ‘fair value less costs to sell’: recognise an ‘impairment loss’
(expense)
Workings: C
Carrying amount given 80 000
Fair value less costs to sell: 70 000 – 5 000 (65 000)
Decrease in value (impairment loss) 80 000 – 65 000 15 000
Journal: 1 January 20X3 Debit Credit

Impairment loss (expense) 15 000
Impairment loss before initial classification as ‘held for sale’
Note: There is no depreciation on this asset.
22. If ‘fair value less costs to sell’ subsequently increases: recognise a ‘reversal of
impairment loss’
(income) – limited to accumulated impairment losses
Workings: C
New fair value less costs to sell: 70 000 – 2 000 68 000

Prior fair value less costs to sell: 100 000 cost – 20 000
accum depreciation –
15 000 impairment loss (65,000)
Impairment loss reversed*: 68 000 – 65 000 3 000
* Note: the ‘accumulated impairment loss’ is 15 000 before the reversal, thus the reversal of 3
000 is not limited (the previous accumulated impairment loss is bigger: 15 000 is bigger than
3 000).
Journal: 30 June 20X3 Debit Credit

- Impairment loss reversed (income) 3 000
Reversal of impairment loss: on re-measurement of ‘NCA held for sale’
Note: There is no depreciation on this asset. The impairment to date is 12 000 (15 ,000 –
3,000)
impairment loss’
Workings: C
Prior fair value less costs to sell 100 000 – 20 000 accum
depreciation –
15 000 impairment loss (65 000)
Increase in value 20 000

Limited to prior cumulative impairment losses 15 000
Impairment loss reversed*: 85 000 – 65 000 = 20 000 limited to 15 000 15 000

* Note: the difference between the latest ‘fair value less costs to sell’ (85 000) and the prior
‘fair value
less costs to sell’ (65 000) of 20 000 is limited to the previous ‘accumulated impairment loss’
of 15,000.
Journal: 30 June 20X3 Debit Credit

- Impairment loss reversed (income) 15 000
Reversal of impairment loss on re-measurement of ‘non-current asset held for sale’
Note: There is no depreciation on this asset. The impairment to date is 0 (15 000 – 15 000)
24 . If carrying amount > ‘fair value less costs to sell’: recognise an ‘impairment loss’
(expense)
Workings: C
Carrying amount given 80 000
Fair value less costs to sell: 70 000 – 5 000 (65 000)
Decrease in value (impairment loss) 80 000 – 65 000 15 000
Journal: 1 January 2013 Debit Credit

Impairment loss on initial classification of NCA as ‘held for sale’
Note: There is no depreciation on this asset. The impairment to date is now C18 000 (3 000
+ 15 000)
impairment loss (income) – limited to accumulated impairment losses
Workings: C
New fair value less costs to sell 70 000 – 2 000 68 000
Prior fair value less costs to sell 70 000 – 5 000 (65 000)
Increase in value (impairment loss reversed*) 68 000 – 65 000 3 000
* Note: the ‘accumulated impairment loss’ is 18 000 before this reversal (15 000 + 3 000),
therefore the impairment loss reversal of 3 000 is not limited (the previous accumulated
impairment loss is bigger: 18 000 is bigger than 3 000).
Journal: 30 June 2013 Debit Credit
Reversal of impairment loss on re-measurement of ‘asset held for sale’
Note: There is no depreciation on this asset. The impairment to date is now C15 000 (18 000
- 3 000)
impairment loss’
Workings: C
Prior fair value less costs to sell 70 000 – 5 000 (65 000)
Limited to prior cumulative impairment losses 15 000 + 3 000 18 000
Impairment loss reversed*: 85 000 – 65 000 = 20 000 limited to 15 000 18 000
* Note: The difference between the latest ‘fair value less costs to sell’ and the prior ‘fair
value less costs to sell’ of 20 000 is limited to the ‘cumulative impairment loss’ recognised of
18 000, calculated as follows:
C
Impairment loss: 18 000
- before reclassification given 3 000
- on reclassification 80 000 – 65 000 15 000
Journal: 30 June 2013 Debit Credit

Reversal of impairment loss on re-measurement of ‘asset held for sale’
Note: There is no depreciation on this asset. The impairment to date is now C0 (18 000 –
18,000)
27: tax effect of reclassification and the cost model Calculations

Current normal income tax Calculations C
Profit before tax 200 000
Add back depreciation Assets held for sale are not depreciated 0
Add back impairment Impairment on re-classification as ‘held for sale’ 5 000
Less tax allowance 100 000 x 10% (10 000)
Taxable profits 195 000
Current tax 195 000 x 30% 58 500
Deferred tax: Carrying Ta Base Temoorary Deferred tax

Non-current Amount difference
asset held for
sale
Bal. 1 Jan. 70,00 90,000 20,000 6,000 asset

2013
Less -5,000 0 Cr
Impairment -1,500 Dr
to fvc-cts
(70k -65k)
Dep. Ta 0 -10,000
Allowance
Bal. 31 Dec. 65,000 80,000 15,000 4,500 ASSET
2013
28: Journals
31 December 2013 Debit
Credit
Tax expense 58 500
Current tax payable (liability) 58
500
Current normal tax payable (estimated)
Tax expense 1 500

Deferred tax (liability) 1
500
Deferred tax adjustment
29. If the actual carrying amount > historical carrying amount (i.e. there is already a
revaluation surplus) and the fair value decreases on date of reclassification (although not
entirely removing the revaluation surplus balance) and there are costs to sell: reverse
revaluation surplus due to drop in fair value and recognise selling costs as an ‘impairment
loss’ ( expense)
Workings: C
Fair value (1 January 20X3) 120 000
Accumulated depreciation (31 December 20X3: since
the revaluation on 1 January 20X3)
120 000/ 8 remaining years (15 000)
Actual carrying amount (1 January 20X4): 120 000 – 15 000 105 000
Fair value Given (100 000)
Decrease in value (all through revaluation surplus)
See below for calculation of RS balance 5 000
Actual carrying amount (1 January 20X4): 120 000 – 15 000 (above) 105 000
Historical carrying amount (1 January 20X4) 100 000/ 10 years x 7 years (70 000)
Balance on the revaluation surplus (1 January 20X4):
Proof: (120 000 – 80 000) / 8 x 7 years 35
000
Decrease in value (above) (5 000)
Balance on the revaluation surplus (1 January 20X4):
Further balance against which further
devaluation would be processed (IAS16) 30 000
Journals: 1 January 2014 Debit
Credit
Plant: cost 15
000
NRVM: Accumulated depreciation set-off against cost
Revaluation surplus FV: C100 000 – Carrying amount: C105 000 5 000
Plant: cost 5
000
Re-measurement to FV before reclassification

impairment losses 9
000
Re-measurement to lower of CA or FV less costs to sell on reclassification:
CA: 100 000 – FV less Costs to Sell: (100 000 – 9 000)
Note: There is no further depreciation on this asset.
revaluation surplus) and fair value increases and there are expected costs to sell: increase
revaluation surplus due to increase in fair value and recognise the expected selling costs as an
‘impairment loss’ (expense)
Workings: C
Fair value 120 000
Accumulated depreciation (31 December 2013:
since the revaluation on 1 January 2013)
120 000/ 8 remaining years (15 000)
Fair value given 150 000
Increase in value (all through revaluation surplus) Through revaluation surplus
because carrying amount is already above the HCA: 100 000 / 10 x 7 (45
000)
Journals: 1 January 2014 Debit Credit

Plant: cost 15 000
NRVM: Accumulated depreciation set-off against cost: 120 000/ 8 years
remaining on date of revaluation
Plant: cost 45 000

Revaluation surplus 45 000
Re-measurement to FV before reclassification:

FV: 150 000 – Carrying amount: 105 000

Re-measurement to lower of CA or FV less costs to sell on
reclassification:
Carrying amount: 150 000 – FV less costs to sell: (150 000 – 20 000)
revaluation surplus) and fair value decreases removing the entire balance on the revaluation
surplus and there are expected costs to sell: reverse revaluation surplus due to decrease in fair
value and recognise the expected selling costs as an ‘impairment loss’ (expense)
Workings: C
Fair value 120 000
Accumulated depreciation (31 December 2013: since
the revaluation on 1 January 2013)
120 000/ 8 years (15 000)
Fair value given (60 000)
Decrease in value (all through revaluation surplus)
See below for calculation of RS bal 45 000
Historical carrying amount (1 January 20X4) 100 000/ 10years x 7 years (70 000)
Balance on the revaluation surplus (1 January 20X4)
: (120 000 – 80 000) / 8 x 7 years 35 000
Decrease in value (above) 45 000
Reversal: revaluation surplus balance Balance in this account (above) 35 000
Impairment loss (balancing figure) 45 000 – 35 000 10 000
Journals: 1 January 2014 Debit Credit

Plant: cost 15 000
NRVM: Accumulated depreciation set-off against cost: 120 000/ 8 years
remaining on date of revaluation
Revaluation surplus (ACA: 105 000 – HCA: 70 000) 35 000

Impairment loss (HCA: 70 000 – FV: 60 000) 10 000
Plant: cost 35 000
Re-measurement to FV before reclassification: FV: 60 000 – CA: 105 000

Re-measurement to lower of CA or FV less costs to sell on reclassification:
CA: 60 000 – FV less costs to sell (60 000 – 20 000)
32. If the new fair value less costs to sell > previous fair value less costs to sell:
reverse the impairment loss limited to prior cumulative impairment losses

Workings: C
New fv less costs to sell (30 June 20X4) 110,000 (FV) – 15 000 (cost to sell) 95 000
Prior fv less costs to sell (1 January 20X4) 100,000 (FV) – 9 000 (costs to sell) (91 000)
Limited to prior cumulative impairment losses 100 000 (FV before reclassification) –
91 000 (FV – costs to sell)
9 000
Therefore: impairment loss reversed Maximum that may be reversed is 9 000;
thus there is no limitation to the reversal
in this case
4 000
Journals: 30 June 2014 Debit
Credit
Impairment loss reversed (income) 4
000
Re-measurement of non-current asset held for sale: increase in fair value
less costs to sell
33. If the new fair value less costs to sell > previous fair value less costs to sell:
reverse the impairment loss limited to prior cumulative impairment losses
Workings: C
New fv less costs to sell (30 June 20X4) 110 000 (FV) – 3 000 (cost to sell) 107 000
Prior fv less costs to sell (1 January 20X4) 100 000 (FV) – 9 000 (costs to sell) (91 000)
Limited to prior cumulative impairment losses 100 000 (FV before reclassification) –
91 000 (FV – costs to sell)
9 000
Therefore: reversal of impairment loss 9 000

Credit
Reversal of impairment loss (income) 9
000
Re-measurement of non-current asset held for sale: increase in fair value
less costs to sell (limited to 9 000)
34. If the new fair value less costs to sell < previous fair value less costs to sell:
recognise a further impairment loss
Workings: C
New fv less costs to sell (30 June 20X4) 90 000 (FV) – 3 000 (cost to sell) 87 000
Prior fv less costs to sell (1 January 20X4) 100 000 (FV) – 9 000 (costs to sell) 91 000
Decrease in value (impairment loss) 4 000

Credit
Plant: accumulated depreciation and impairment losses 4
000
Re-measurement of non-current asset held for sale: decrease in fair value
less costs to sell
35. The lower cost and fair value less cost to sell is determined as follows
Historical Cost 1,000,000
Accumulated depreciation (600,000)
Carrying amount, Dec. 31, 201 400,000
36. Fair Value 350,000
Cost to Sell (20,000)
Fair Value less cost to sell 330,000
37. Building held for sale 330,000
Accumulated Dep. 600,000
Impairment loss 70,000
Building 1,000,000
*squeeze method
38 to 40
The carrying amount adjusted for depreciation not recognize is computed as follows:
Carrying amount on December 31, 201 before
Classification as held for sale 400,000
Depreciation in 202 not recognize because the
Is classified as held for sale(400k/4years) (100,000)
Carrying amount adusted for depreciation
not recognized 300,000
Recoverable amount (FV less cost to sell-higher) 310,000
Lower between adusted carrying amount
And recoverable amount 300,000
1.
Dec. 31, 20x2 Building 300,000
Loss on reclassification 30,000
Building-held for sale 330,000
*squeeze
41. A
Cost- 1/1/2015 3, 000,000
Accumulated Depreciation – 12/31/2015(3,000,000/10) ( 300,000)
Carrying Amount- 12/31/2015 2, 700,000
Fair value less cost of disposal (2, 200,000 – 30, 000) 2, 170,000
Impairment loss for 2015 530,000
42. B
Carrying amount - 12/31/2015 2, 700,000
Depreciation that would have been recognized in 2016 ( 300,000)
Carrying amount – 12/31/2016 2, 400,000
Recoverable Amount (1, 500,000 – 100,000) – lower 1, 400,000
43. A
Measurement of equipment – 12/31/2016 1, 400,000
Carrying amount – 12/31/2015 2, 170,000
Loss on reclassification ( 770,000)
44. B
Cost 1, 000,000
Accumulated Depreciation (750, 000)
Carrying Amount – 5/1/18 250, 000
Fair vale less cost of disposal – 5/1/18 (100,000 – 10,000) 90, 000
Impairment Loss – 5/1/18 160, 000
Impairment Loss 160, 000

Machine held for sale 160, 000
45. A
Fair value less cost of disposal – 12/31/2018(150,000-20,000) 130, 000
Fair value less cost of disposal – 5/1/18 (90, 000)
Gain on reversal of impairment 40, 000
Machine held for sale 40, 000

Gain on reversal of impairment 40, 000
PFRS 5, paragraph 25, provides that an entity shall not depreciate a non-current asset while it
is classified as held for sale or while it is part of a disposal group classified as held for sale.
46. A
Carrying amount 10, 200,000

Fair value less cost of disposal (8, 200,000-500, 000) 7, 700,000
Impairment Loss 2, 500,000
47. C
Carrying amount equal to fair value 11, 500,000
Fair value less cost of disposal (11, 500,000-500, 000) (11, 000,000)
Impairment loss for 2015 500, 000
Actually, the cost of disposal for revalued asset is recognized as the impairment loss.
48. A
Adjusted carrying amount on December 31, 2015
equal to fair value less cost of disposal (11, 500,000-500,000) 11, 000,000
49. B
Sale price 12, 000,000
Carrying Amount (11, 000,000)
Gain on sale of land 1, 000,000
50. D
Revaluation surplus – September 1, 2015 3, 500,000
Increase in fair value (11, 500,000 – 10, 000,000) 1, 500,000
Revaluation surplus reclassified to retained earnings 5, 000,000
51. C
Total revenues 4, 700,000

Total Expenses (5, 400,000)
Impairment Loss (5, 000,000 – 3, 800,000) (1, 200, 000)
Employee termination cost ( 200, 000)
Loss from discontinued operations (2, 100,000)
52. B
Income 6, 000,000
Impairment loss (2, 500,000)
Income before tax 3, 500,000
Income tax – 30% (1, 050,000)
Net Income 2, 450,000
53. C
Sales- South 6, 500,000
Expenses-South 6, 900,000
Operating loss ( 400,000)
Loss on disposal (3, 000,000)
Total Loss (3, 400,000)
Tax saving (30% x 3, 400,000) 1, 020,000
Loss from discontinued operations (2, 380,000)
54. C
Operating Loss 9, 000,000
Termination Loss 4, 000,000
Total Loss 13, 000,000
Tax benefit- 30% 3, 900,000
Loss from discontinued operation 9, 100,000
55. A
Sales- Golf 34, 000
Cost of goods sold- Golf (24, 000)
Other expenses- Golf (27, 000)
Gain on disposal 25,000
Income before tax 8, 000
Income tax (30% x 8, 000) (2, 400)
Income from discontinued operations 5, 600
56. B
Operating Loss for the year 500, 000

Impairment loss (8, 000,000 – 6, 500,000) 1, 500,000
57. C
Operating income of discontinued operation segment 10, 000,000
Loss on disposal (6, 500,000)
Income from discontinued operation 3, 500,000
58. D
Operating loss for the current year 10, 000,000
Loss on disposal in 2015 700, 000
Pretax loss from discontinued operation 10, 700,000
The expected Operating loss in 2018 and expected gain on disposal in 2016 are not
recognized in 2015.
59. B
Operating loss in 2015 7, 000,000
Impairment loss in 2015 5, 200,000
60. B
Carrying Amount 20, 000,000
Fair Value 13, 000,000

Cost of disposal (1, 500,000)
Fair value less cost of disposal 11, 500,000
61. B.
Carrying amount 2,500,000
Fair value less cost of disposal (1,800,000 – 500,000) 1,300,000
Impairment loss P 1,200,000
62. A.
Sales price 1,650,000
Carrying amount - November 15, 2018 1,300,000
Loss on disposal P 350,000
63. B.
Fair value – December 2017 9,850,000
Fair value – December 2016 7,000,000
Revaluation surplus in 2017 – OCI P 2,850,000
64. C.
Sale price 9,000,000
Carrying amount equal to fair value on July 2018 8,200,000
Gain on sale of land P 800,000
65. D.
Cost 4,000,000
Accumulated depreciation 2,950,000
Carrying amount – May 1, 2018 1,050,000
Fair value less cost of disposal – May 1, 2018
(500,000 – 60,000) 440,000
Impairment loss – May 1, 2018 P 610,000
66. C.
Fair value less cost of disposal – December 31, 2018
(850,000 – 120,000) 730,000
Fair value less cost of disposal – May 1, 2018 440,000
Gain on reversal of impairment P 290,000
67. A.
Carrying amount equal to fair value 7,500,000
Fair value less cost of disposal (7,500,000- 300,000) 7,200,000
Impairment loss for 2018 P 300,000
68. C.
equal to fair value less cost of disposal P 7,200,000
69. C.
Sale price 8,000,000
Carrying amount 7,200,000
Gain on sale of land P 800,000
70. C.
Revaluation surplus – September 1, 2018 3,500,000
Increase in fair value (7,500,000 – 7,000,000) 500,000
Revaluation surplus reclassified to retained earnings P 3,000,000
71. A.
Cost – January 1, 2018 6,000,000
Accumulated depreciation – December 31, 2019
(6,000,000/ 10 x 2 years) 1,200,000
Carrying amount – December 31, 2019 4,800,000
Fair value less cost of disposal – December 31, 2019
(4,500,000 – 400,000 cost of disposal) 4,100,000
Impairment loss for 2019 P 700, 000
72. C.
Carrying amount – December 31, 2019 4,800,000
Depreciation that would have been recognized in 2020 600,000
(6,000,000/ 10)
Carrying amount – December 31, 2020 P 4, 200,000
73. B.
Measurement of equipment 4,200,000
Carrying amount per book – December 31, 2020 4,100,000
Gain on reclassification P 300,000
The carrying amount per book on December 31, 2020 is equal to the fair value less cost of
disposal on December 31, 2019.
74. D.
Operating loss for the year 300,000
Impairment loss (3,000,000 – 2,500,000) 500,000
Loss from discontinued operation P 800,000
75. A.
Operating income of discontinued segment 5,000,000
Loss on disposal 4,000,000
Income from discontinued operation P 1,000,000
76. C.
Fair value of asset division 3,000,000
Carrying amount of assets 4,000,000
Impairment loss (1,000,000)
Operating loss of division (1,500,000)
Total loss (2,500,000)
Tax effect (30% x 2,500,000) 750,000
Loss from discontinued operation P 1,750, 000
77. A.
Income from continuing operations 6,000,000
Loss from discontinued operation 1,750,000
Net income P 4,250,000
78. C.
Sales – West 3,000,000
Expenses – West 4,200,000
Operating loss (1,200,000)
Loss on disposal (3,000,000)
Total loss P 4,200,000
79. A.
Operating loss in 2018 2,500,000
Impairment loss in 2018 1,200,000
Loss from discontinued operation P 1,300,000
80. D.
Operating loss for the current year 6,000,000
Loss on disposal in 2018 500,000
Pretax loss from discontinued operation P 5,500,000
The expected operating loss in 2018 and expected gain on disposal in 2019 are not
recognized in 2018.
81. B
Carrying Amount 3200000

FVLCOD (2200000-200000) 2000000
Impairment loss 1200000
82. A
Carrying amount 1500000

FVLCOD (1100000150000) 950000
83. C
Sale price 800000
Carrying Amount 950000
Loss on Disposal (150000)
84. B
Fair value- December 31, 2018 8500000

Fair value December 31, 2017 7000000
Revaluation Surplus in 2018- OCI 1500000
85. C
Sale price 8000000

Carrying amount equal to FV on July 1, 2019 7600000
Gain on sale of land 400000
86. A
Carrying amount equal to FV 5500000

FVLCOD 5400000
87. C

Equal to FVLCOD 54000000
88. D
Sale price 6000000

Gain on sale of land 600000
89. B
Revaluation surplus October 1, 2017 1500000

Increase in fair value 500000
Revaluation surplus reclassified to retained earnings 2000000
90. B
Cost 5000000
Accumulated depreciation-Apr. 1, 2017 3750000
FVLCOD-Apr. 1, 2017
(500000-50000) 450000
Impairment loss – Apr. 1, 2017 80000

Machine held for sale 800000
91.D
FVLCOD – Dec. 31, 2017

(750000-100000) 650000
FVLCOD ̶ Apr. 1, 2017 450000
Gain on reversal of impairment 200000
Machine held for sale 200000

Gain on reversal of impairment 200000
92. B
93. C
Cost January 1, 2017 5000000

Accumulated depreciation (5000000/5) 1000000
Carrying amount before classification – Dec. 31, 2017 4000000
FVLCOD 3500000
Impairment loss for 2017 500000
94. B
Cost – January 1, 2017 5000000

Accumulated depreciation (5000000/5x2 years) (200000)
Carrying amount No classification as held for sale 3000000
FVLCOD 2700000
Measurement of equipment as PPE 2700000
Under PFRS 5, paragraph 27, an entity shall measure a noncurrent asset that ceases to be
classified as held for sale at the lower between:
a. The carrying amount on the basis that the asset had never been classified as held for
sale.
b. The recoverable amount on the date of the decision not to sell. The recoverable
amount is higher between fair value less cost of disposal and value in use.
Carrying amount per book 3500000

Measurement of equipment 2700000
Loss on reclassification 800000
95. B
Measurement of equipment December 31, 2018 2700000

Depreciation for 2019 (2700000/3 years remaining) (900000)
Carrying amount December 31, 2019 1800000
96. C
Operating loss for the year 200000

Impairment loss (40000003500000) 500000
Loss from discontinued operation 700000
97. D
Operating income of discontinued segment 5000000

Loss on disposal (4500000)
Income from discontinued operation 500000
98. A
Loss from disposition of assets 700000

Operating Loss 200000
Total loss from discontinued operation 900000
99. A
Operating Loss 2000000

Loss on remeasurement to FVLCOD 1500000
Included in profit or loss 3500000
100. D
Income from continuing operations 500000

Loss from discontinued operations (SQUEEZE) (200000)
Net income 500000

Group 2 IFRS 5

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Group 2 IFRS 5

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Non-current Assets Held

for Sale and Discontinued

4 Answer Key for Theories 52

5 Answer Key for Problems 55

 Management must be committed to a plan to sell the asset;

 Deferred tax assets (IAS 12 Deferred Tax)

 Represents a separate major line of business or geographical area of operations,

IFRS 5 requires discontinued operations to be presented separately in the financial statements

IFRS 5 requires discontinued operations to be presented as follows:

 The post-tax profit or loss of the discontinued operation,

In the statement of financial position: non-current assets of a disposal group must be

b. an entity obtains a firm purchase commitment and, as a result, a buyer or others

3. In accordance with IAS 37 Provisions, contingent liabilities and contingent assets, a

b. it is probable that an outflow of resources embodying economic benefits will be

d. All of the above.

4. A restructuring provision includes those direct expenditures arising from the

a. costs of retraining staff

b. costs of relocating staff

d. necessarily entailed in the discontinuance

a. a description of the non-current asset or disposal group.

a. deferred tax assets.

b. assets arising from employee benefits.

c. financial assets included in the scope of IAS 39 Financial Instruments: recognition

7. Paragraph 15 requires an entity to measure a non-current asset (or disposal group)

The measurement rules derived from the measurement principle are:

8. Recognition of impairment losses and reversals, except

d. A non-current asset should be depreciated or amortised while it is classified as held

9. IFRS 5 requires that an entity present:

d. All of the above.

11. IFRS5 covers:

1. The classification, measurement and presentation of assets “held for sale”

12. A disposal group, which was part of a cash-generating unit:

a. Becomes a noncurrent asset

a. Classify a noncurrent assets as “held for sale” in those financial statements

a. Before the group’s “fair value, less costs to sell is remeasured

15. The profit or loss of a discontinued operation should be disclosed…

a. in the Statement of Financial Position under “Retained Profit and Loss”

18. A discontinued operation is defined as a component of an entity which:

19. With regard to discontinued operations, an entity's statement of comprehensive income

a. Management is considering a plan to sell the asset

23. A disposal group always consists of a number of cash-generating units.

a.TRUE b.FALSE c.BOTH d.NONE

24. A non-current asset held for sale should be measured at:

a. description of the non-current asset or disposal group

a.TRUE b.FALSE c.BOTH d.NONE

29. A discontinued operation is defined as a component of an entity which:

a. Has been disposed of

30. With regard to discontinued operations, an entity's statement of comprehensive income

a. The post-tax profit or loss of discontinued operations

a. As a discontinued asset under IFRS 5

a. Write off the machinery as obsolete

a. the sale may not occur

35. The profit or loss of a discontinued operation should be disclosed…

a. in the Statement of Financial Position under “Retained Profit and Loss”

a. Management intends to sell the asset

a. Classify this building as ‘held for sale’ as per IFRS 5

39. When presenting discontinued operations in the cash flow statement…

a. they are pooled with other current assets

40. A disposal group is a group of:

41. What does it mean to be "highly probable"?

a. Significantly existing than not

42. PFRS 5 does not apply to the following, except: