Fair value less costs to sell

Learning objectives

• Calculate fair value less costs to sell from the data provided in the case.L1, L2, L3

Normative references

• IFRS 5 §15Measurement: an asset (or disposal group) classified as held for sale is measured at the lower of its carrying amount and fair value less costs to sell (the starting carrying amount results from para. 18).
• IFRS 5Costs to sell: incremental costs directly attributable to the disposal, excluding finance costs and income tax expense (Appendix A).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Fair value less costs to sell is calculated by deducting from fair value the incremental costs directly attributable to the disposal.L1
• Dulac classifies a warehouse as held for sale. Case assumption: its fair value is {fair_value} and the costs to sell (agent's commission and deed fees) are estimated at {costs_to_sell}. Calculate fair value less costs to sell.L2
• The Calvet group has to measure a warehouse held for sale. Two indications are available: a firm offer from a buyer at €700,000 and an independent expert's estimate at €660,000, with costs to sell estimated at €20,000. The carrying amount is €690,000. Write a note that selects a fair value, justifies the choice from the facts of the case, calculates fair value less costs to sell and concludes on measurement.L3