What Are The Critaria That Most Be Met To Classify
According to IFRS 5, to be classified as held for sale, assets must meet certain criteria such as being available for immediate sale and having a high probability of being sold within 12 months (with limited exceptions). These criteria apply to both non-current assets and disposal groups. The sale must also be actively marketed and management must be committed to the plan to sell. IFRS 5 defines "highly probable" as significantly more likely than probable, and sets specific criteria for this classification.
According to IFRS 5, for an asset to be classified as held for sale, it must meet specific criteria. The key criteria include:
- The asset must be available for immediate sale in its present condition.
- There must be a high probability of the sale being completed within 12 months, excluding a longer period in exceptional circumstances.
- The sale plan should be highly probable and management should be committed to the plan.
- The asset must be actively marketed for sale at a price that is reasonable in relation to its current fair value.
- Developers and others cannot continue using the asset and any delay could jeopardize the sale.
These criteria aim to ensure that the classification of the asset as held for sale is appropriate and reflects the entity's intention to sell the asset within a relatively short timeframe.
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