an entity plans to dispose of a group of its assets as an asset sale the assets form 611064

Allocation of impairment loss to the components of a disposal group [IFRS 5.IG10]

An entity plans to dispose of a group of its assets (as an asset sale). The assets form a disposal group, and are measured as follows:

 The entity recognises the loss of €1,100 (€16,000 – €14,900) immediately before classifying the disposal group as held for sale. The entity measures the fair value less costs to sell of the disposal group as €13,000. Because an entity measures a disposal group classified as held for sale at the lower of its carrying amount and fair value less costs to sell, the entity recognises an impairment loss of €1,900 (€14,900 – €13,000) when the group is initially classified as held for sale. The impairment loss is allocated to non-current assets to which the measurement requirements of the IFRS are applicable. Therefore, no impairment loss is allocated to inventory and investments in equity instruments. The loss is allocated to the other assets in the order of allocation described above.

The allocation can be illustrated as follows:

First, the impairment loss reduces any amount of goodwill. Then, the residual loss is allocated to other assets pro rata based on the carrying amounts of those assets.