[In IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations, issued by the IASB in 2004, the term ‘net selling price’ was replaced in IAS 36 by ‘fair value less costs to sell’.]

BCZ31 IAS 36 defines net selling price as the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the incremental costs directly attributable to the disposal of the asset.

BCZ32 In other words, net selling price reflects the market’s expectations of the future cash flows for an asset after the market’s consideration of the time value of money and the risks inherent in receiving those cash flows, less the disposal costs.

BCZ33 Some argue that direct incremental costs of disposal should not be deducted from the amount obtainable from the sale of an asset because, unless management has decided to dispose of the asset, the going concern assumption should apply.

BCZ34 IASC believed that it is appropriate to deduct direct incremental costs of disposal in determining net selling price because the purpose of the exercise is to determine the net amount that an enterprise could recover from the sale of an asset at the date of the measurement and to compare it with the alternative of keeping the asset and using it.