1.

A noncurrent asset is presented in the classified statement of financial position as current asset
A. If the noncurrent asset is actually sold after the end of reporting period but before the financial statements
are authorized for issue.
B. Only when it qualifies to be classified as :held for sale” in accordance with PFRS 5 as of the end of the
reporting period.
C. Only when it qualifies to be classified as :held for sale: in accordance with PFRS 5 after the end of the
reporting period but before the financial statements are authorized for issue.
D. In any of these circumstances.

2. PFRS 5 Non-current Assets Held for Sale and Discontinued Operations does not apply to which of the following
assets
A. Investment property measured under the cost model.
B. Investments in associate or subsidiary or joint venture.
C. Intangible assets
D. Inventories and accounts receivable

3. According to PFRS 5, a non-current asset for disposal group 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 principally through a sale transaction 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 issue.
D. Whenever management decides to sell that asset.

4. A non-current 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

5. The criteria under PFRS 5 for classifying as asset as “ held for sale” are most likely met in which of the instances?
A. ABC Co. plans to sell its office building. However, the sale will not take place until ABC Co. finishes
constructing its new office building.
B. DEF Co. plans to sell its machinery. However, the sale will not take place until after DEF completes its
production backlog.
C. XYZ, Inc. plans to sell its delivery truck. However, the sale will not take place until after XYZ, Inc. finishes
a major overhaul on the truck’s engine.
D. UVW Co. plans to sell its building, classified as investment property measured under the cost model, as is
and without any renovations.

6. Noncurrent assets classified as held for sale are measured at

A. Fair value
B. Fair value less costs to sell
C. Fair value through other comprehensive income
D. Lower of carrying amount and fair value less costs to sell

7. An entity makes a formal plan to sell its building that has no value in use. The building has a carrying amount
of P1,000,000 and a fair value less costs to sell of P800,000. The building is currently being marketed at its
current condition at a price of P1,000,000. The entity’s management believes that it is significantly more likely
than not that the sale will be consummated within 12 months after the end of the reporting period. How should
the entity present the building in its current statement of financial position?
A. As property, plant and equipment measured at P1,000,000.
B. As noncurrent asset held for sale measured at P1,000,000.
C. As property, plant and equipment measured at P800,000.
D. As noncurrent asset held for sale measured at P800,000.
8. Which of the following is not one of the criteria for classifying an asset as held for sale in accordance with PFRS
5?
A. The sale is probable to occur within one year from the end of the reporting period.
B. The asset or disposal groups is available for immediate sale in its present condition.
C. An appropriate level of management is committed to a plan to sell the asset.
D. An active program to locate a buyer has been initiated.

9. ABC Co. classified a land as “held for sale” in its December 31, 20x0 financial statements in accordance with
PFRS 5. On December 31, 20x1, the land remains unsold. Which of the following instances would not provide
a valid reason for ABC Co. to continue to classify the land as held for sale in its 20x1 financial statements?
A. The failure to sell the land is beyond the control of ABC Co.
B. As of December 31, 20x1, ABC Co. has decreased the sale price of the land.
C. ABC Co. has increased its effort on selling the land by engaging more brokers and making more
advertisements.
D. ABC Co. has not changed the sale price of the land.

10. On December 31, 20x1, ABC Co. has no intention of selling a land classified as investment property measured
at cost. However, on January 2, 20x2, because of an unanticipated opportunity. ABC Co. sold the land at a very
high profit. How should ABC Co. classify the land in its December 31, 20x1 statement of financial position?
A. As investment property measured at the sale price on January 2, 20x2.
B. As investment property measured at cost.
C. As held for sale asset measured at the sale price on January 2, 20x2.
D. The land shall not be included in the December 31, 20x1 statement of financial position because it is already
considered sold.

Use the following information for the next four questions:

On December 31, 20x1, an entity classifies machinery with historical cost of P3,000,000, accumulated
depreciation of P2,000,000 and remaining useful life of 5 years as held for sale. The entity depreciates its
machinery using the straight line method with no residual value. The fair value of the machinery on December
31, 20x1 is P800,000 while costs to sell are estimated at P50,000. The sales price of the machinery is P800,000.

11. Which of the following shall be recognized by the entity in its 20x1 financial statements?
Held for sale asset Impairment loss
A. P800,000 P150,000
B. P750,000 P200,000
C. P750,000 P250,000
D. P0 P250,000

12. Requirement: Provide the journal entry on December 31, 20x1.

13. On December 31, 20x2, the machinery remains unsold. The fair value of the machinery on December 31, 20x2
is P700,000 while costs to sell are estimated at P50,000. The entity decreased the sales price to P650,000.
Which of the following shall be recognized by the entity in its 20x2 financial statements?
Held for sale asset Impairment loss
A. P700,000 P100,000
B. P650,000 P100,000
C. P650,000 P150,000
D. P0 P100,000

14. Requirement: Provide the journal entry on December 31, 20x2.

15. On December 31, 20x3, the machinery remains unsold. The fair value of the machinery on December 31, 20x3
is P1,100,000 while costs to sell are estimated at P50,000. The failure to locate a buyer and complete the sale
is beyond the entity’s control. The entity further decreased the sale price of P600,000. Which of the following
shall be recognized by the entity in its 20x3 financial statements?
Held for sale asset Gain on impairment
recovery
A. P1,100,000 P450,000
B. P1,000,000 P350,000
C. P750,000 P250,000
D. P0 P350,000
16. Requirement: Provide the journal entry on December 31, 20x3.

17. On December 31, 20x4, the machinery remains unsold. The fair value of the machinery on December 31, 20x4
is P1,000,000 while costs to sell are estimated at P50,000. The entity did not further decrease the sales price.
Which of the following shall be recognized by the entity in its 20x4 financial statements?
A. Property, plant and equipment for P400,000.
B. Property, plant and equipment for P1,000,000.
C. Noncurrent asset held for sale for P950,000.
D. Noncurrent asset held for sale for P1,000,000.

18. Requirement: Provide the journal entry on December 31, 20x4.

19. On April 1, 20x1, an entity decides to dispose a major product line. All the conditions for held for sale
classification under PFRS 5 are met. On this date, the carrying amount of the net assets of the major product
line is P1,000,000. The entity expects gross proceeds of P600,000 from the disposal. Direct costs associated
to the decision to dispose the major product line amount to P50,000.

From January 1 to March 31, the profit from the product line is P200,000, while from April 1 to December 31,
the loss from the product line is P120,000. The entity is subject to an income tax rate of 30%. Assume there
are not temporary differences.

In relation to the product line, how much profit (loss) will the entity recognize in its 20x1 financial statements?

Continuing operations Discontinued

operations
A. P200,000 P399,000
B. P140,000 P399,000
C. (P250,000) (P84,000)
D. P0 (P259,000)