I am trying to learn a bit about company operations and finances. I doing some light reading on BMO's 2019 Annual Report to Shareholders. I just randomly chose a listed company; just start somewhere.
page 143 for the document. Under Assets Held for Sale:
Assets Held for Sale
Non-current non-financial assets classified as held-for-sale are measured at the lower of their carrying amount and fair value less costs to sell and arepresented within other assets in our Consolidated Balance Sheet. Subsequent to its initial classification, a non-current asset is no longer depreciatedor amortized, and any subsequent write-down in fair value less costs to sell is recognized in non-interest revenue, other, in our ConsolidatedStatement of Income.
What I am getting from this is that the bank can classify assets such as IP as held-for-sale, and they will be measured at the lower end of how much they can sell the asset for, subtract the cost of selling it. And as soon as they classify the asset as held-for-sale, the asset is considered to no longer depreciate.
Ok. My problem with this is lets say there is an asset "B", and I know that asset "B" worth 100 dollars for now, but it will depreciate quickly to 1 dollar due to "reasons". So why wouldn't the bank have the incentive to simply classify that this asset "B" is held-for-sale so that on the books it is still 100 dollars, but in reality it is worth far less than that.
"B" can rebound and worth more again, but then the bank can declassify the asset.
Am I understanding this correctly?