Question

a non current asset must be classified as 'held for sale' if: a)the asset's carrying amount will be recovered principally through a sale transaction rather than through use. b) the asset is held primarily for the purpose of trading. c) the asset is expected to be sold within 12 months after reporting period. d) the asset is expected to be sold within its normal operating cycle.

Answer 1

As per IFRS 5 / IAS5, a non-current asset must be classified as 'held for sale' if the carrying amount of the asset will principally be recovered through a sale transaction rather than through the use of the asset.

Hence, option a is the correct answer.

Option b is not the correct answer because a non-current asset primarily held for trading is not a condition as per the standard to be classified as held for sale.

Option c is one of the conditions for the sale of the asset to be highly probable and not for the classification of a non-current asset as held for sale.

Option d is not the criteria for classification of a non-current asset as 'held for sale'.