A noncurrent asset is an asset that does not meet the definition of a current asset.

The
noncurrent asset may be an individual asset, like land and building, or a disposal group.
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. The group includes goodwill acquired in a
business combination if the group is a cash generating unit to which goodwill has been
allocated. PFRS 5, paragraph 6, provides that a noncurrent asset is classified as held
for sale if the carrying amount shall be recovered principally through a sale transaction
rather than through continuing use.

PFRS 5, paragraph 15, provides that an entity shall measure a noncurrent asset or
disposal group classified as held for sale at the lower of carrying amount and fair value
less cost of disposal. Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the
measurement date. PFRS 5, paragraph 25, further provides that a noncurrent asset
classified as held for sale shall not be depreciated.

Appendix A of PFRS 5 defines a discontinued operation as "a component of an entity

that either has been disposed of or is classified as held for sale" and:

a. Represents a separate major line of business or geographical area of operations.

b. Is part of a single co-ordinated plan to dispose of a separate major line of business or

geographical area of operations.

c. Is a subsidiary acquired exclusively with a view to resale.

PFRS 5, paragraph 13, prohibits noncurrent assets that will be abandoned from being
classified as held for sale. However, the standard further provides that if the assets to
be abandoned are a major line of business or geographical area of operations, they are
reported in discontinued operations at the date on which they are actually abandoned.
Illustration In October 2013, an entity decides to abandon all of its cotton mills which
constitute a major line of business. All work stops at the cotton mills during the year
ended December 31, 2014. In the financial statements for the year ended December 31,
2013, the results and cash flows of the cotton mills are treated as continuing operations.
In the financial statements for the year ended December 31, 2014, the results and cash
flows of the cotton mills are treated as discontinued operations because it is in 2014 that
the cotton mills are actually abandoned.

Noncurrent asset or disposal group is classified as "held for sale" when the asset is
available for immediate sale and the sale is highly probable. For the sale to be highly
probable, which of the following statements is incorrect? = The sale is expected to
qualify for recognition as a completed sale within two years from the date of
classification of the asset as "held for sale".

An entity acquired a subsidiary exclusively with a view to selling it. The subsidiary met
the criteria to be classified as held for sale. At the end of reporting period, the subsidiary
has not yet been sold and six months have passed since the acquisition. How will the
subsidiary be measured in the statement of financial position at the date of the first
financial statements after acquisition? = At the lower of cost and fair value less cost
of disposal

A noncurrent asset that ceases to be classified as held for sale shall be measured at =
Lower between the carrying amount before the asset was classified as held for
sale adjusted for depreciation that would have been recognized if the asset had
not been classified as held for sale and the recoverable amount at the date of the
subsequent decision not to sell.

Which of the following is a requirement for a component of an entity to be classified as a

discontinued operation? = It must have been a cash generating unit or a group of
cash generating units while being held for use.

The results of operations of a component of an entity that either has been disposed of
or classified as held for sale shall be reported in discontinued operations if

I. The operations and cash flows of the component have been or will be
eliminated from the ongoing operations of the entity as a result of the disposal
transaction.
II. The entity continues to have a significant continuing involvement in the
operations of the component after the disposal transaction.
III. The entity outsources the manufacturing operations of a component and sells
the manufacturing facility of the component but continues to sell the product
previously manufactured by the facility sold.

= I only

Which of the following statements in relation to discontinued operations is true? = The

discontinued operations consist of the income or loss from operating the
discontinued component net of tax effect as well as the gain or loss on disposal
of the discontinued component net of tax effect.