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Wiley IFRS: Practical Implementation Guide and Workbook
On moving to accounting under IFRS, some of the assets had been transferred at deemed cost and had
not been remeasured under IFRS. These assets were propert y, plant, and equipment, and inventory. Un–
der IFRS , property, plant, and equipment would be stated at $16 million and inventory stated at $9 mil–
lion . The fair value less costs to sell of the disposal group is $25 million. Assume that the disposal group
qualifie s as held for sale. Therefore, under lAS 36, any impairment loss will be alloca ted to goodwi ll
and PPE.
Required
Describe how the disposal group would be shown in the financial statements for the year ended Decem–
ber 3 1, 20X5.
Solution
Goodwill
Property, plant, and equipment
Inventory
Financial assets
Financial liabilities
Carrying
value
!m
6
18
10
7
11)
TI
Remeasured
$m
6
16
9
7
11)
34
Impairment
$m
(6)
(3)
(2)
Carrying amount
afte r impairment
$m
13
9
7
11)
~
IFRS 5 requires that, immed iately before the initial classification of the disposal group as held for sale,
the carrying amounts of the disposal group be measured in accordance with applicable IFRS and any
profit or loss dealt with under those IFRS. The reduction in the carrying amount of property, plant, and
equipment will be dealt with in acco rdance with lAS 16; the inventory will be dealt with in accordance
with lAS 2.
After the remeasurement, the entity will recognize an impairment loss of $9 million. This loss is allo–
cated in accordance with lAS 36. Thu s goodwill will be reduced to zero and property, plant, and equip–
ment to $13 million. The loss will be charged aga inst profit or loss.
If
not separately presented on the
face of the income statement, the caption in the income statement that includes the loss should be dis–
closed.
The major classes of assets and liabilities classified as held for sale should be separately disclosed on the
face of the balance sheet or in the notes. In this case there would be separate disclosure of the disposal
group:
As sets
Noncurrentassets
Currentassets
Noncurrentand current assets classifiedas held for sale
Z2
Total assets
Equity and liabilities
Equity attributable to parent
Amounts recognized directly in equity relating to
noncurrent assets held for sale (18-16)
.1
Minority interest
Total equity
Noncurrent liabilities:
Current liabilities
Liabilities directory associated with noncurrent assets
classified as held for sale
~
Total liabilities
Total equity and liabilities
Assets classified as held for sale at the balance sheet date are not reported retrospectively; therefore,
comparative balance sheets are not restated.