b) IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations

The non-current assets of Resource LTD should have been presented as held for sale in the financial statements. In accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations, the following applies:

1. Criteria for Classification as Held for Sale:
   • The appropriate level of management must be committed to a plan to sell.
   • The sale of the asset must be probable.
   • Evolve LTD’s acceptance of a binding offer in August 2016 and the publication of this information indicate a high probability of sale.
   • Despite uncertainties surrounding the sale, the transaction remained highly probable as of August 31, 2016.
   • IFRS 5 does not require the existence of a binding sales agreement to classify a non-current asset as held for sale, only a high probability of its occurrence.
2. Other Indicators Supporting Held for Sale Classification:
   • A buyer for the non-current assets had been found.
   • The sale occurred within 12 months of classification as held for sale.
   • The asset was actively marketed for sale at an agreed sales price.
   • Despite the uncertainties at August 31, 2016, events after the reporting period confirmed the classification (finalization of the agreement on September 20, 2016).
   • The absence of public disclosure regarding uncertainties was irrelevant to the classification.
3. Measurement and Presentation Requirements:
   • The non-current assets met the criteria to be classified as held for sale; thus, they should have been measured and presented as such in the financial statements.
   • Measurement Before Classification:
     • IFRS 5 states that immediately before the initial classification of an asset as held for sale, the carrying amount of the asset should be measured in accordance with applicable IFRSs. This requirement had already been met for Resource LTD’s non-current assets.
   • Measurement After Classification:
     • IFRS 5 requires an entity to classify a non-current asset as held for sale if its carrying amount will be recovered principally through sale rather than through continuing use.
4. Relevance of the Sale Timeline:
   • Evolve LTD’s acceptance of an offer indicates that the transaction met the criteria for classification as held for sale as of August 31, 2016.
   • The finalization of the agreement on September 20, 2016, confirmed the existing situation as of the reporting date.
5. Statement of Financial Position Requirements:
   • Evolve LTD cannot apply IFRS 5 measurement criteria without classifying the asset as held for sale in its statement of financial position.
   • Classifying the item without such presentation could result in a profit or impairment not properly reflected.
   • Assets classified as held for sale must be presented separately on the face of the statement of financial position.