what could be included in "costs to sell" under ifrs 5. Could this include redundancy?

Question

If selling a group of assets/liabilities that represents a business...in determining fair value less costs to sell....what could costs to sell include....could it include redundancy costs?

Answer 1

As per IFRS 5, cost to sell includes expenses incurred to effect the sale transaction of block of Assets/liability e.g. Professional/consultancy fees, Actuary fees. 

Redundancy cost shall also be included in cost to sell.  

Redundancies arise in several situations, including:

- disposal of part of a business (e.g. shop closures)
- relocation of a business
- merging of business functions and units following a takeover (as the acquiring business tries to meet its target for cost saving synergies)
- the closure of a brand, product line of operating unit
- the introduction of new methods of work (e.g. automation) that reduces the number of employees needed
- rationalization of the organisation structure of a business.

 Hence, in above mentioned case Redundancy cost shall be included in Cost to sell at present value.