ACCA SBR ^INT Syllabus C. Reporting The Financial Performance Of A Range Of Entities - Held for sale disposal group - Notes ^{9 / 16}

A 'disposal group' is a group of assets, possibly with some associated liabilities, which an entity intends to dispose of in a single transaction.

Any impairment losses reduce the carrying amount of the disposal group in the order of allocation required by IAS 36

A disposal group with reversal of impairment losses

Normally the rule here is that an impairment under IFRS 5 can only be reversed up to as much as a previous impairment. 

A disposal group may take up the advantage of some assets within the group using up the unused Impairment losses on other assets.

• Illustration

Here the total nbv is 270.

If by the year end the FV-CTS is now:

Asset 1: 150, 
Asset 2: 100 and 
Asset 3: 150

Asset 1 it can be revalued to 150, increase of 70 as previous impairment was 100

Asset 2 can be revalued to 100, an increase of 10 as previous impairment was 20

Asset 3 could normally not be revalued to 150, an increase of 50 but only to 130 as it’s previous impairment was only 30

However, it can also use any unused impairments of the other assets in it's disposal group such as 10 from asset 2 and a further 10 from asset 1, and so can be revalued up to 150.

What if the asset or disposal group is not sold within 12 months?

1. Normally, returns to PPE at the amount it would have been at had it not gone to held for sale.

2. Check for impairment.

3. Or, keep in HFS if delay is caused by circumstances outside the control of the entity e.g.

   Buyer unexpectedly imposes transfer conditions which extend beyond a year

   Or the market demand has collapsed.