Quiz on PFRS 5 and Non-current Assets

A non-current asset is presented in the statement of financial position as current asset

• if the noncurrent asset is actually sold after the end of reporting period but before the financial statements is authorized for issue.

• only when it qualifies to be classified as held for sale in accordance with PFRS 5 as of the end of the reporting period.

• 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 is authorized for issue.

• in any of these circumstances.

The criteria under PFRS 5 for classifying an asset as held for sale are most likely met in which of the following instances?

• ABC CO. plans to sell its office building. However, the sale will not take place until ABC CO. finishes constructing its new office building:

• DEF CO. plans to sell its machinery. However, the sale will not take place until after DEF completes its production backlog.

• 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.

• UVW CO. plans to sell its building, classified as investment property measured under the cost model, as is and without any renovations.

On December 31, 20214, MM warehouse has a carrying value of P3,500,000 with a remaining useful life of 10 years, but its fair market value was P3,300,000. As of December 31, 2014, MM CORP. intends to sell the warehouse to a buyer after it vacates the warehouse. The time necessary to vacate the warehouse is usual and customary for sales of such assets. In its December 31, 2014 statement of financial position, MM CORP. should include the warehouse as

• Property, plant & equipment valued at P3,300,000

• Property, plant and equipment at P3,500,000

• Non-current asset held for sale and valued at P3,300,000

• Non-current asset held for disposal and valued at P3,500,000

Which of the following is not one of the criteria for classifying an asset as held for sale in accordance with PFRS 5

• The sale is probable to occur within one year from the end of the reporting period.

• The asset or disposal group is available for immediate sale in its present condition.

• An appropriate level of management is committed to a plan to sell the asset.

• An active program to locate a buyer has been initiated.

Which statement is incorrect concerning presentation of noncurrent asset or disposal group classified as held for sale

• The liabilities of a disposal group classified as held for sale shall be presented separately from other

• The assets and liabilities a disposal group classified as held for sale shall not be offset as a single amount.

• 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.

• An entity shall present a noncurrent asset held for sale and the assets of a disposal group classified as held for sale separately from other assets.

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

• recognized for the fair value change during the period.

• recognized in other comprehensive income.

• recognized only to the extent of cumulative impairment losses previously recognized.

• not recognized.

The results of a discontinued operations are presented in the statement of profit or loss

• before the profit or loss from continuing operations but after the profit for the year.

• after the profit or loss from continuing operations but before the profit for the year.

• separately from the profit or loss from continuing operations and it does not affect the profit of the year.

• As an adjustment to the beginning balance of retained earnings.

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

• Discontinued operations are reported as the last category after income from continuing operations.

• The discontinued operations consist only of the gain or loss on disposal of the discontinued component net of tax effect.

• The discontinued operations consist only of the income or loss from operating the discontinued component net of tax effect.

• 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.