SOUTHERN PHILIPPINES
INSTITUTE OF SCIENCE AND TECHNOLOGY
Date: April 27, 2021
STUDENT NAME: JULINE GRACE T. CAJOLO DEGREE: BSA – 2ND YEAR
SUBJECT TITLE: Intermediate Accounting 3 INSTRUCTOR: Mr. Linofel De Dios

CHAPTER 8 – Noncurrent Asset Held for Sale

Answers:

1. Noncurrent assets are a company's long-term investments for which the full value will not be
realized within the accounting year. Examples of noncurrent assets include investments in other
companies, intellectual property (e.g. patents), and property, plant and equipment.

2. A disposal group is a group of assets to be disposed of, by sale or otherwise, together as

a group in a single transaction and liabilities directly associated with those assets that will be
transferred in the transaction.

3. 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.

4. 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.

5. Highly probable as meaning “significantly more likely than probable”, where

'probable' means “more likely than not”. It is likely to happen or be true. That is not only
possible, it is probable.

6. In general terms, assets (or disposal groups) held for sale are not depreciated, are measured at

the lower of carrying amount and fair value less costs to sell, and are presented separately in
the statement of financial position.

7. If the fair value less cost of disposal is lower than carrying amount of the asset or disposal group,
the write down to fair value less cost of disposal is treated as an impairment loss.

8. In abandoned noncurrent asset, the carrying amount will be recovered principally through
continuing use or the noncurrent asset is to be used until the end of its economic life. While in
temporarily abandoned, the entity shall not account for a noncurrent asset that has been
temporarily taken out of use as if it had been abandoned.
9. In change in classification, the entity shall measure the noncurrent asset that ceases to be as
held for sale at the lower of carrying amount before the asset was classified as held for sale
adjusted for any depreciation or amortization. Also, recoverable amount at the date of the
subsequent decision not to sell.

10. The assets of the disposal group shall be described as ‘noncurrent assets classified as held for
sale’ presented separately as a single amount under current assets.