FINANCIAL ACCOUNTING AND REPORTING

FAR13 Noncurrent Assets Held for Sale

13.1. Introduction and Scope............................................................................................ 1

13.2. Classification as Held for Sale ............................................................................... 1

13.3. Measurement ............................................................................................................... 3

13.4. Change of Plans ........................................................................................................... 3

13.5. Presentation and Disclosures................................................................................ 4

FAR13 Noncurrent Assets Held for Sale
13.1. Introduction and Scope
 The purpose of PFRS 5 is to specify the accounting for assets held for sale and the presentation and
disclosure of discontinued operations. Assets classified as non-current in accordance with PAS 1 shall not
be reclassified as current assets until they meet the criteria of PFRS 5. Noncurrent assets held for
distribution to owners shall be accounted for using PFRS 5 similar to noncurrent assets held for sale.
 The measurement provisions of IFRS 5 do not apply to the following assets:
a. Deferred tax assets (PAS 12)
b. Assets arising from employee benefits (PAS 19)
c. Financial assets (PAS 39/PFRS 9)
d. Non-current assets accounted for under fair value model (PAS 40)
e. Non-current assets measured at fair value less estimated point of sale costs (PAS 41)
f. Contractual rights under insurance contracts (PFRS 4)
 If the noncurrent asset that is within the scope of PFRS 5 is part of a disposal group, the measurement
requirements of PFRS 5 shall be applied to the group as a whole, that is, the group is measured at the
lower of its carrying amount and fair value less costs to sell.
 PFRS 5 defines 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 coordinated plan to dispose of a separate major line of business or geographical area
of operations or
c. is a subsidiary acquired exclusively with a view to resale

13.2. Classification as Held for Sale

 An entity shall classify a non-current asset, or a disposal group as held for sale if its carrying amount will
be recovered principally through a sale transaction rather than through continuing use.
 The following chart summarizes the criteria that must be met for a noncurrent asset to be classified as held
for sale:

Available for
immediate sale
Management
committed to a plan
to sell
Usual and
customary
Criteria Active programme
(ALL must be met) to locate a buyer

Highly probable
Actively marketed
at reasonable price
relative to fair value
Completed within
one year from
classification date
Unlikely to
withdraw plan to
sell

 The following table summarizes other classification issues that may arise in relation to noncurrent assets
held for sale:

Sale is not completed Could still be classified as held for sale if the delay is caused by events beyond
within one year the entity’s control and the entity is still committed to selling the asset

a. The entity has committed itself to sell a noncurrent asset, and it expects
that others may impose conditions on the transfer of the asset and where
the conditions could not be completed until after a firm purchase
commitment has been made and a firm purchase commitment is highly
Extension of period
probable within a year.
b. A firm purchase commitment is made but a buyer unexpectedly imposes
conditions on the transfer of the noncurrent asset held for sale. Timely
actions should be taken to respond to the conditions, and a favorable
resolution is anticipated.
FAR13 NONCURRENT ASSETS HELD FOR SALE 1
 c. During the one-year period, unforeseen circumstances arise that were
considered unlikely, and the noncurrent asset is not sold. Necessary
action to respond to the change in circumstances should be taken. The
noncurrent asset should be being actively marketed at a reasonable
price and the criteria set out for the asset to be classified as held-for-sale
should have been met.

If the criteria for classifying a noncurrent asset as held for sale occur after
the end of the reporting period, the noncurrent asset should not be shown
Non-adjusting event
as held for sale. However, certain information should be disclosed about the
noncurrent assets.

Can be treated as held for sale when such an exchange has a commercial
Exchange of
substance in accordance with PAS 16, that is, measured at lower of carrying
noncurrent assets
amount or fair value less cost to sell

Classified as held for sale at the date of the acquisition only if it is anticipated
Acquisition with a that it will be sold within the one-year period and it is highly probable that
view to disposal the held for sale criteria will be met within a short period of the acquisition
date. This period normally will be no more than three months.

Abandonment means that the noncurrent asset will be used to the end of its
economic life, or the noncurrent asset will be closed rather than sold. They
do not meet the definition of held for sale. The reasoning behind this is
Assets held to be
because the carrying amount of the noncurrent asset will be recovered
abandoned
principally through continued usage. A noncurrent asset that has been
temporarily taken out of use or service cannot be classified as being
abandoned.

Case Study 1
a. An entity is committed to a plan to sell a building and has started looking for a buyer for that building. The entity
will continue to use the building until another building is completed to house the office staff located in the building.
There is no intention to relocate the office staff until the new building is completed.

b. An entity has an asset that has been designated as held for sale in the financial year to December 31, 2018. During
the financial year to December 31, 2019, the asset still remains unsold, but the market conditions for the asset
have deteriorated significantly. The entity believes that market conditions will improve and has not reduced the
price of the asset, which continues to be classified as held for sale. The fair value of the asset is P5 million, and the
asset is being marketed at P7 million.

c. An entity is planning to sell part of its business that is deemed to be a disposal group. The entity is in a business
environment that is heavily regulated, and any sale requires government approval. This means that the sale time
is difficult to determine. Government approval cannot be obtained until a buyer is found and known for the
disposal group and a firm purchase contract has been signed. However, it is likely that the entity will be able to
sell the disposal group within one year.

d. An entity is reorganizing its business activities. In one location, it is stopping the usage of certain equipment
because the demand for the product produced by that equipment has reduced significantly. The equipment is to
be maintained in good working order, and it is expected that it will be brought back into use if the demand
increases. Additionally, the entity intends to close three out of five manufacturing units. The manufacturing units
constitute a major activity of the entity. All the work within the three units will end during the current year, and
as of the year-end all work will have ceased.

Required
Would the above assets or disposal group be classified as held for sale?

FAR13 NONCURRENT ASSETS HELD FOR SALE 2

13.3. Measurement
 Just before an asset is initially classified as held for sale, it should be measured in accordance with the
applicable PFRS. When noncurrent assets or disposal groups are classified as held for sale, they are
measured at the lower of the carrying amount and fair value less costs to sell.
 When the sale is expected to occur in over a year’s time, the entity should measure the cost to sell at its
present value. Any increase in the present value of the cost to sell that arises should be shown in profit and
loss as a finance cost.
 Any impairment loss is recognized in profit or loss on any initial or subsequent write-down of the asset
or disposal group to fair value less cost to sell.
 Any subsequent increases in fair value less cost to sell of an asset can be recognized in profit or loss as
gain to the extent that it is not in excess of the cumulative impairment loss that has been recognized in
accordance with PFRS 5 or previously in accordance with PAS 36.
 Any impairment loss recognized for a disposal group should be applied in the order set out in PAS 36.
 Noncurrent assets or disposal groups classified as held for sale should not be depreciated. Any interest or
expenses of a disposal group should continue to be provided for.

Case Study 2
On July 1, 2019, a machine of Entity X with a carrying amount of P10,000 and a remaining useful life of 5 years is
classified as held for sale. On June 30, 2020, the machine is sold at its fair value. From July 1, 2019 until June 30, 2020,
the machine’s fair value is P8,000 and costs to sell are P1,000.

Required
Prepare any necessary entries in X’s financial statements for the time period July 1, 2019 until June 30, 2020. X’s
reporting period ends on December 31.

Case Study 3
On July 1, 2019, Entity X classifies a disposal group as held for sale. The group comprises the following assets:
Carrying amount 12/31/18 Additional information
Machine P20,000 Remaining useful life as at 12/31/18: 5 years
Acquired patent 10,000 Remaining useful life as at 12/31/18: 5 years
Finished goods 8,000 The net realizable value as at 6/30/19: P7,000
Receivables 6,000 The receivables are measured at amortized cost.
On June 30, the value of the receivables is P5,000.

For both the machine and the patent, which were accounted for according to the cost model of PAS 16 and PAS 38,
there is no indication of impairment on June 30, 2019. The receivables are current assets.

On June 30, 2019, fair value less costs to sell of the disposal group is P33,000.

Required
Prepare any necessary entries in X’s financial statements for the time period January 1, 2019 until December 31, 2019.
X’s reporting period ends on December 31.

13.4. Change of Plans

 If criteria for an asset to be classified as held for sale are no longer met, then the asset or disposal group
ceases to be held for sale.
 A reclassification from held for sale to held for distribution to owners is not a change to a plan and therefore
not a new plan.
 In this case, the asset or disposal group should be valued at the lower of:
a. the carrying amount before the asset or disposal group was classified as held for sale (as adjusted for
any subsequent depreciation, amortization, or revaluation) and
b. its recoverable amount at the date of the decision not to sell
 Any adjustment to the value should be shown in income from continuing operations for the period.
 If an asset is removed from a disposal group, the disposal group will continue to be classified as such only
if it still meets the criteria set out in the Standard. If the criteria are not met, then the individual noncurrent
assets of the group will be reviewed to see if they meet the criteria to be classified as held for sale.

Case Study 4
The situation is the same as in Case 2. However, assume that the classification as held for sale ceases on July 1, 2020
and that the machine will be used until the end of its original useful life. Assume that the value in use is P9,000 on July
1, 2020.

Required
Prepare any necessary entries in X’s financial statements for the time period July 1, 2019 until December 31, 2020.

FAR13 NONCURRENT ASSETS HELD FOR SALE 3

13.5. Presentation and Disclosures
 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).

Presenting discontinued operations

 Classification as a discontinued operation depends on when the operation also meets the requirements to
be classified as held for sale.
 A single amount in the statement of comprehensive income comprising the total of:
i. the post-tax profit or loss of discontinued operations and
ii. the post-tax gain or loss recognized on the measurement to fair value less costs to sell or on the
disposal of the assets or disposal group(s) constituting the discontinued operation.
 An analysis of the single amount (either in the notes or in the statement of comprehensive income):
i. the revenue, expenses and pre-tax profit or loss of discontinued operations;
ii. the related income tax expense as required by PAS 12.
iii. the gain or loss recognized on the measurement to fair value less costs to sell or on the disposal of the
assets or disposal group(s) constituting the discontinued operation; and
iv. the related income tax expense as required by PAS 12.
 Cash flow disclosure is required – either in the notes or statement of cash flows.
 Amount of income attributable to owners of the parent – either in the notes or statement of comprehensive
income.
 Comparatives are restated.

Gains or losses related to continuing operations

 Any gain or loss on the remeasurement of a non-current asset (or disposal group) classified as held for sale
that does not meet the definition of a discontinued operation shall be included in profit or loss from
continuing operations.

Presentation of a noncurrent asset or disposal group classified as held for sale

 An entity shall present a non-current asset classified as held for sale and the assets of a disposal group
classified as held for sale separately from other assets in the statement of financial position.
 The liabilities of a disposal group classified as held for sale shall be presented separately from other
liabilities in the statement of financial position.
 Those assets and liabilities shall not be offset and presented as a single amount.
 The major classes of assets and liabilities classified as held for sale shall be separately disclosed either in
the statement of financial position or in the notes, except if the disposal group is a newly acquired
subsidiary.
 An entity shall present separately any cumulative income or expense recognized in other
comprehensive income relating to a non-current asset (or disposal group) classified as held for sale.
 Prior year balances in the statement of financial positions are not reclassified as held for sale.

Additional disclosures
 An entity shall disclose the following information in the notes in the period in which a non-current asset
(or disposal group) has been either classified as held for sale or sold:
i. a description of the non-current asset (or disposal group)
ii. 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
iii. the gain or loss recognized (impairment) and, if not separately presented in the statement of
comprehensive income, the caption in the statement of comprehensive income that includes that gain
or loss
iv. if applicable, the reportable segment in which the non-current asset (or disposal group) is presented
(PFRS 8)
 An entity shall disclose, in the period of the decision to change the plan to sell the non-current asset (or
disposal group), a description of the facts and circumstances leading to the decision and the effect of the
decision on the results of operations for the period and any prior periods presented.
Case Study 5
a. On December 31, 2019, Entity X classifies a disposal group as held for sale. The disposal group also meets the
definition of a discontinued operation starting on that date. The group’s marginal revenue attributable to the
discontinued operation is P40,000 in 2019 and P36,000 in 2018. The group’s marginal expenses attributable to
the discontinued operation are P32,000 in 2019 and P34,000 in 2018. In 2019, an expense of P1,000 is recognized
as a result of a write-down to fair value less costs to sell according to PFRS 5.

b. The situation is the same as in (a). However, assume that the discontinued operation was already sold in 2019 and
that there was no write-down. As a result of the sale, a loss of P2,000 was recognized.

Required
Present the discontinued operation in a simplified illustration of X’s consolidated separate income statements for the
periods 2019 and 2018. Furthermore, describe the presentation of the discontinued operation in X’s consolidated
statement of financial position. Ignore taxes.

FAR13 NONCURRENT ASSETS HELD FOR SALE 4

 Case Study 6
Z plans to dispose of a group of net assets that form a disposal group. The net assets at December 31, 2019, are
Carrying value at 12/31/19
Goodwill P6,000,000
Property, plant and equipment 18,000,000
Inventory 10,000,000
Financial assets (profit of P2,000,000 recognized in equity) 7,000,000
Financial liabilities (4,000,000)
P37,000,000

On moving to accounting under IFRS, some of the assets had been transferred at deemed cost and had not been
remeasured under PFRS. These assets were property, plant, and equipment, and inventory. Under PFRS, property,
plant, and equipment (PPE) would be stated at P16 million and inventory stated at P9 million. The fair value less costs
to sell of the disposal group is P25 million. Assume that the disposal group qualifies as held for sale.

Required
Describe how the disposal group would be shown in the financial statements for the year ended December 31, 2019.

Quizzer – Problem 1
1. Aquamarine Company is a diversified entity with nationwide interests in commercial real estate development,
banking, mining and food distribution. The food distribution division was deemed to be inconsistent with the long-
term direction of the entity. On October 1, 2019, the board of directors voted to approve the disposal of this division.
The sale is expected to occur in August 2020. The food distribution had the following revenue and expenses in 2019:
January 1 to September 30, revenue of P35,000,000 and expenses of P25,000,000; October 1 to December 31,
revenue of P10,000,000 and expenses of P12,000,000. The carrying amount of the division's assets on December
31, 2019 was P50,000,000 and the recoverable amount was estimated to be P55,000,000. The sale contract requires
the entity to terminate certain employees incurring an expected termination cost of PI,000,000 to be paid by
December 15, 2020. Income tax rate is 30%. What amount should be reported as income from discontinued
operations for 2019?
A. P5,600,000
B. P9,100,000
C. P4,900,000
D. P8,400,000

2. On November 1, 2019, the management of Blue Company committed to a plan to dispose of a major subsidiary. The
disposal meets the requirements for classification as discontinued operations. The carrying amount of the
subsidiary was P8,000,000 and management estimated the fair value less cost to sell to be P6,500,000. For 2019,
the subsidiary had a loss of P2,000,000. What amount should be presented as pretax loss from discontinued
operations for 2019?
A. None
B. P1,500,000
C. P2,000,000
D. P3,500,000

3. Capri Company accounts for noncurrent assets using the cost model. On July 1, 2019, the entity classified a
noncurrent asset as held for sale. At that date, the asset's carrying amount was P5,000,000, its fair value was
estimated at P3,500,000 and the cost to sell at P100,000. On December 31, 2019, the asset was sold for net proceeds
of P2,500,000. What amount should be included as an impairment loss for 2019?
A. P1,600,000
B. P2,500,000
C. P1,500,000
D. P900,000

4. Denim Company, a parent entity, approved on December 1, 2019 a plan to sell its subsidiary. The sale is expected
to be completed on March 31, 2020. The year-end is December 31, 2019 and the financial statements were approved
on March 1, 2020. The subsidiary had assets with carrying amount of P15,000,000 including goodwill of P1,500,000
on December 31, 2019. The subsidiary made a loss of P3,000,000 from January 1 to March 1, 2020 and is expected
to make a further loss of P2,000,000 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 expects to sell the subsidiary for P9,000,000 and to incur cost of selling of
P500,000. The value in use of the subsidiary was estimated to be P10,000,000.

In the December 31, 2019 statement of financial position, what is the measurement of the subsidiary classified as a
"disposal group held for sale"?
A. P15,000,000
B. P10,000,000
C. P9,000,000
D. P8,500,000

FAR13 NONCURRENT ASSETS HELD FOR SALE 5

5. Ebony Company accounts for noncurrent assets using the revaluation model. On October 1, 2019, the entity
classified a freehold property as held for sale. At that date, the carrying amount of the land was P5,000,000 and the
balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at
P5,500,000 and the cost to sell at P100,000. The land was sold on January 31, 2020 for P6,000,000. What amount
should be reported as gain on disposal of land in 2020?
A. P1,000,000
B. P2,600,000
C. P500,000
D. P600,000

6. Fuchsia Company purchased an equipment for P5,000,000 on January 1, 2019. The equipment has a useful life of 5
years with no residual value. On December 31, 2019, the entity classified the asset as held for sale. On such date,
the fair value less cost to sell of the equipment is P3,500,000.

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. On December 31, 2020, the fair value
less cost to sell of the equipment is P2,700,000.

Question 1: What amount of impairment loss should be recognized in 2019?

A. P1,500,000
B. P1,000,000
C. P500,000
D. None

Question 2: What amount should be included in profit or loss in 2020 as a result of the reclassification of the
equipment to property, plant and equipment?
A. P800,000 gain
B. P800,000 loss
C. P300,000 gain
D. P300,000 loss

Question 3: What is the depreciation for 2021?

A. P1,000,000
B. P875,000
C. P900,000
D. P675,000

Quizzer – Theory 1
1. Assets held for sale are
A. required under PAS 36 to be tested for impairment annually
B. depreciated
C. amortized over a period not exceeding 5 years
D. not depreciated

2. Non-current assets are presented as current items in the statement of financial position
A. only when they are expected to be sold within 12 months from the end of the reporting period
B. only if they are actually sold after the reporting period but before the date of authorization of the financial
statements for issue
C. only when they qualify as held for sale assets under PFRS 5
D. never presented as current items

3. According to PFRS 5, held for sale classification is permitted when

A. the noncurrent asset or disposal group is available for immediate sale in its present condition
B. the sale is highly probable
C. both a and b
D. the sale actually occurred after the reporting period but before the financial statements were authorized for
issue

4. A noncurrent asset classified as held for sale in accordance with PFRS 5 has not been sold after 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

FAR13 NONCURRENT ASSETS HELD FOR SALE 6

5. The qualification of an asset to be classified as held for sale after the reporting period but before the financial
statements are authorized for issue
A. is a non-adjusting event after the reporting period
B. is an adjusting event after the reporting period
C. is an extraordinary item
D. either a or b

6. Which of the following statements is true regarding the accounting treatment of costs to sell under PFRS 5?
A. Costs to sell are added to the fair value when determining the measurement basis for an asset held for sale.
B. Costs to sell are never discounted because held for sale assets should be sold within one year.
C. Costs to sell are discounted if it is expected that the sale will be made beyond one year.
D. Both a and c

7. According to PFRS 5, gains and losses on remeasurement of assets held for sale are
A. recognized in profit or loss
B. recognized only for impairment losses
C. recognized in other comprehensive income
D. not recognized

8. According to PFRS 5, gain on impairment reversal on an asset held for sale is

A. recognized for the fair value change during the period
B. recognized in other comprehensive income
C. recognized only to the extent of cumulative impairment losses previously recognized
D. not recognized

9. According to PFRS 5, assets and liabilities of a disposal group are presented

A. as one line item in either current assets or current liabilities
B. as one line item in either noncurrent assets or noncurrent liabilities
C. separately on the face of the statement of financial position
D. either a or b

10. The results of discontinued operations are presented separately in the statement of profit or loss and other
comprehensive income
A. as a single amount gross of tax C. as a single amount net of tax
B. as part of the regular line items D. either a or c

11. According to PFRS 5, a disposal group may qualify as discontinued operation if

A. it is a component of an entity C. both a and b
B. meets the held for sale classification criteria D. neither a nor b

12. It 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.
A. Disposal group C. Discontinued operation
B. Noncurrent asset held for sale D. Cash-generating unit

13. A noncurrent asset or disposal group shall be classified as held for sale when
I. The sale is highly probable.
II. The asset is available for immediate sale in its present condition subject only to terms that are usual and
customary for sales of such asset or disposal group.
A. I only C. Both I and II
B. II only D. Either I or II

14. In order for a noncurrent asset to be classified as held for sale, the sale must be highly probable. “Highly probable”
means
A. The future sale is likely to occur.
B. The future sale is more likely than not to occur.
C. The sale is certain.
D. The probability is higher than more likely than not.

15. For the sale of a noncurrent asset held for sale to be highly probable (choose the incorrect one)
A. Management must be committed to a plan to sell the asset.
B. An active program to locate a buyer and complete the plan must have been initiated.
C. The asset must be actively marketed for sale at a reasonable price in relation to its current fair value.
D. The sale should be expected to qualify for recognition as a completed sale within two years from the date of
classification of the asset as “held for sale”.

FAR13 NONCURRENT ASSETS HELD FOR SALE 2

16. An entity shall classify a noncurrent asset or disposal group as “held for sale” when
A. The carrying amount of the asset or disposal group will be recovered through a sale transaction.
B. The carrying amount of the asset or disposal group will be recovered through continuing use.
C. The noncurrent asset or disposal group is to be abandoned.
D. The noncurrent asset or disposal group is idle or retired from active use.

17. A noncurrent asset that is to be abandoned should not be classified as held for sale because
A. Its carrying amount will be recovered principally through continuing use.
B. It is difficult to value.
C. It is unlikely that the noncurrent asset will be sold within 12 months.
D. It is unlikely that there will be an active market for the noncurrent asset.

18. An entity shall measure a noncurrent asset or disposal group classified as held for sale at
A. carrying amount
B. fair value less cost to sell
C. lower of carrying amount and fair value less cost to sell
D. higher of carrying amount and fair value less cost to sell

19. Which of the following statements in relation to noncurrent asset held for sale is true?
I. An asset that meets the criteria for classification as held for sale after the end of the reporting period but before
the authorization of the financial statements shall be measured in the statement of financial position at the
lower of carrying amount and fair value less cost to sell.
II. To be classified as asset held for sale, the sale must be expected to be completed within 12 months from the
end of the financial year.
A. I only C. Both I and II
B. II only D. Neither I nor II

20. A noncurrent asset classified as “held for sale” shall be presented in the statement of financial position as
A. Current asset C. Noncurrent investment
B. Property, plant and equipment D. Intangible asset

21. Which statement is incorrect concerning presentation of noncurrent asset or disposal group classified as held for
sale?
A. An entity shall present a noncurrent asset held for sale and the assets of a disposal group classified as held for
sale under current assets separately from other assets.
B. The liabilities of a disposal group classified as held for sale shall be presented under current liabilities
separately from other liabilities.
C. The assets and liabilities a disposal group classified as held for sale shall not be offset as a single amount.
D. An entity shall depreciate a noncurrent asset classified as held for sale or while it is part of a disposal group
classified as held for sale.

22. An entity shall recognize any subsequent increase in fair value less cost to sell of a noncurrent asset or disposal
group classified as held for sale as
A. Deferred gain as component of equity
B. Deferred gain as component of liability
C. Gain entirely to be included in profit or loss
D. Gain to be included in profit or loss but not in excess of the cumulative impairment loss previously recognized

23. An entity classified a noncurrent asset accounted for under the cost model as held for sale at the current year-end.
Because no offers were received at an acceptable price, the entity decided at the end of the following year not to
sell the asset, but to continue to use it. The asset should be measured at the end of the following year at
A. The lower of carrying amount and recoverable amount.
B. The higher of carrying amount and recoverable amount.
C. The lower of carrying amount on the basis that it had never been classified as held for sale and recoverable
amount.
D. The higher of carrying amount on the basis that it had never been classified as held for sale and recoverable
amount.

24. This is defined as the “operations and cash flows that can be clearly distinguished, operationally and for financial
reporting purposes, from the rest of the entity.
A. Component of an entity C. Noncurrent asset
B. Disposal group D. Foreign operation

25. A component of an entity is classified as a discontinued operation

I. When the entity has actually disposed of the operation.
II. When the operation meets the criteria to be classified as “held for sale”.
A. Either I or II C. I only
B. Neither I nor II D. II only

FAR13 NONCURRENT ASSETS HELD FOR SALE 2

26. A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale
and
I. Represents a separate 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 exclusively with a view to resale.
A. I only C. I and III only
B. I and II only D. I, II and III

27. Which of the following is a requirement for a component of an entity to be classified as discontinued operation?
A. Its activities must permanently cease prior to the financial statements being authorized for issue.
B. It must comprise a separately reportable segment in accordance with PFRS 8.
C. Its assets must have been classified as held for sale in previous financial statements.
D. It must have been a cash generating unit or group of cash generating units while being held for use.

28. The results of discontinued operation shall be presented

A. On the face of the income statement as a single amount below the income from continuing operations.
B. On the face of the income statement with details of revenue and expenses side by side with continuing
operations.
C. As a single amount in the statement of retained earnings.
D. In the accompanying notes to the financial statements.

29. Which of the following statements in relation to a discontinued operation is true?

I. When the discontinued criteria are met after the end of the reporting period, the operation shall retrospectively
be separately presented as a discontinued operation.
II. The net cash flows attributable to the operating, investing and financing activities of a discontinued operation
shall be separately presented.
A. I only C. Both I and II
B. II only D. Neither I nor II

30. An entity has correctly classified its manufacturing operation as a disposal group held for sale and as discontinued
operation during the current year. Which of the following statements is true?
I. The disposal group’s results for the preceding year shall be re-presented as relating to discontinued operation
in the comparative figures for the statement of comprehensive income for the current year.
II. The disposal group’s assets at the end of the preceding year shall be re-presented as held for sale in the
comparative figures for the statement of financial position at the current year-end.
A. I only C. Both I and II
B. II only D. Neither I nor II

FAR13 NONCURRENT ASSETS HELD FOR SALE 2