Non-current Assets Held for Sale – Current practice for NPAEs

After the TFRS for NPAEs (Revised 2022) became effective on 1 January 2023, TFAC published an example of how to apply Chapter 10, “Property, Plant and Equipment”, to non-current assets held for sale.

Keywords: Mazars, Thailand, Accounting, Non-current Assets Held for Sale, Property, Plant and Equipment, TFRS, TFAC 

 

After non-current assets are classified as held for sale, companies should follow the following procedures (Paragraph 10.40): 

  1. Non-current assets that are classified as held for sale are measured at the lower of the carrying amount and the total selling price that an asset might generate upon its sale, less a reasonable estimate of costs to sell and recognized decrease in value to profit or loss for the year (Paragraph 10.40.1). 
  2. A gain from any subsequent increase in the total selling price that an asset might generate upon its sale, less a reasonable estimate of costs to sell an asset, can be recognized in the profit or loss to the extent that it is not in excess of the cumulative loss that has been recognized (Paragraph 10.40.2). 
  3. No depreciation or amortization is applied. Non-current assets that are classified as held for sale are not depreciated (Paragraph 10.40.3). 
  4. When such assets are sold, companies must recognize the gain or loss from the sale of assets as profit or loss for the year (Paragraph 10.40.4). 
  5. Non-current assets classified as held for sale must be presented separately on the face of the statement of financial position as current or non-current assets according to paragraph 4.8 of Chapter 4, “Presentation of Financial Statements” (Paragraph 10.40.5). 

Example: classification, presentation, and accounting entries 

As at 1 January 2023, a company has equipment with a net book value of THB 480,000 (the cost was THB 600,000, and the useful life is 5 years). The remaining useful life is 4 years, there is no residual value, and the equipment is depreciated using the straight-line method. 

As at 30 June 2023, the company classified this equipment as non-current assets held for sale as set out below: 

Selling price that an asset might generate upon its sale, less a reasonable estimate of costs to sell 

Net book value of equipment 

THB 440,000 

THB 420,000 

= THB 450,000 (selling price that an asset might generate upon its sale) – THB 10,000  

(a reasonable estimate of costs to sell) 

= THB 480,000 (net book value carried forward) – THB 60,000 (depreciation expenses of THB 480,000 x 6 months / 48 months) 

The valuation of this non-current asset held for sale as at 30 June 2023 is THB 420,000 (net book value that is lower than the total selling price an asset might generate upon its sale, less a reasonable estimate of costs to sell). Depreciation was no longer applied as of the classification date of 30 June 2023. 

As a result, the company recognized this transaction as follows: 

On 30 June 2023 

 

 Debit (in Thai baht) 

 Credit (in Thai baht) 

Depreciation expenses – Equipment 

                 60,000 

 

Accumulated depreciation expenses – Equipment

 

                               60,000

Recorded depreciation expenses from 1 January 2023 to 30 June 2023 (the date of classification)  

Non-current assets held for sale – Equipment 

              420,000 

 

Accumulation depreciation expenses – Equipment 

              180,000 

 

Equipment 

 

                 600,000 

Classification of equipment to non-current assets held for sale 

On 31 December 2023 

The company must classify and present this non-current asset held for sale separately on the face of the statement of financial position as “current assets” according to paragraph 4.8.1.4 of Chapter 4, “Presentation of Financial Statements”, because the company sold this asset on 31 January 2024 (the benefit from this asset was received within 12 months of the reporting period). 

On 31 January 2024 

As at 31 January 2024, the company sold this equipment for THB 430,000 with costs to sell of THB 12,000.

 

 Debit (in Thai baht) 

 Credit (in Thai baht) 

Cash 

               418,000 

 

Loss from sale of assets 

                   2,000 

 

Non-current assets held for sale – Equipment 

 

                 420,000 

Recorded sale of non-current assets held for sale 

THB 418,000 = THB 430,000 (selling price) – THB 12,000 (cost to sell)  

Reference: Example for TFRS for NPAEs (Revised 2022), published on 20 September 2023 (in Thai). https://bit.ly/4787g2F