Lesson 4 of 8 · All lessons in this module
- Intangible assets: definition, purchase and business combinations
- Internally developed intangibles and capitalising versus expensingVideo lesson
- Impairment of PPE and intangiblesVideo lesson
- Assets held for sale and impairment reversals
- Derecognition: sale, abandonment, exchange and spin-offVideo lesson
- Disclosures for PPE and intangible assets
- Fixed asset turnover, asset age and reinvestmentVideo lesson
- Integrated cases: a purchase price allocation and the PPE note
Lesson 4 of 8 · 12 min
Assets held for sale and impairment reversals
An asset the company has decided to sell is written down to fair value less costs to sell and no longer depreciated, and whether a past impairment can be reversed depends on the framework and on whether the asset is held for use or for sale.
In short
- Reclassify a long-lived asset as held for sale when management intends to sell, the sale is highly probable and the asset is available for immediate sale in its present condition.
- At reclassification, test for impairment: if carrying amount > fair value less costs to sell, write it down to that amount.
- Assets held for sale are no longer depreciated or amortised.
- IFRS permits impairment reversals for assets held for use and held for sale, but not above the carrying amount the asset would have had without the impairment.
- US GAAP: no reversal for assets held for use; reversal allowed for assets held for sale if fair value rises.
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