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):

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).
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).
No depreciation or amortization is applied. Non-current assets that are classified as held for sale are not depreciated (Paragraph 10.40.3).
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).
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)