17. Assets Held for Sale
Details of assets held for sale as of December 31, 2016 and 2017, are as follows:
| 2016 | ||||||||||||||||
| Acquisition cost1 |
Accumulated impairment |
Carrying amount |
Fair value less costs to sell |
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| (In millions of Korean won) | ||||||||||||||||
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Land held for sale |
￦ | 31,310 | ￦ | (8,179 | ) | ￦ | 23,131 | ￦ | 24,704 | |||||||
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Buildings held for sale |
50,086 | (21,069 | ) | 29,017 | 29,300 | |||||||||||
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Total |
￦ | 81,396 | ￦ | (29,248 | ) | ￦ | 52,148 | ￦ | 54,004 | |||||||
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| 2017 | ||||||||||||||||
| Acquisition cost1 |
Accumulated impairment |
Carrying amount |
Fair value less costs to sell |
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| (In millions of Korean won) | ||||||||||||||||
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Land held for sale |
￦ | 133,445 | ￦ | (1,492 | ) | ￦ | 131,953 | ￦ | 251,520 | |||||||
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Buildings held for sale |
34,862 | (11,309 | ) | 23,553 | 24,548 | |||||||||||
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Total |
￦ | 168,307 | ￦ | (12,801 | ) | ￦ | 155,506 | ￦ | 276,068 | |||||||
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| 1 | Acquisition cost of buildings held for sale is net of accumulated depreciation. |
The valuation technique and input variables that are used to measure the fair value of assets held for sale as of December 31, 2017, are as follows:
| 2017 | ||||||||||||
| Fair value |
Valuation |
Unobservable input2 |
Range of (%) |
Relationship of | ||||||||
| (In millions of Korean won) | ||||||||||||
|
Land and buildings |
￦ | 276,068 |
Market comparison approach model and others |
Adjustment index | 0.20~1.10 |
Fair value increases as the adjustment index rises. | ||||||
| Adjustment ratio | -20.00~0.00 |
Fair value decreases as the absolute value of adjustment index rises. | ||||||||||
| 1 | The Group adjusted the appraisal value by the adjustment ratio in the event the public sale is unsuccessful. |
| 2 | Adjustment index is calculated using the real estate index or the producer price index, or land price volatility. |
The fair values of assets held for sale were measured by qualified independent appraisers with experience in valuing similar properties in the same area. In addition, per the fair value hierarchy on Note 6.1, the fair value hierarchy of all investment properties has been categorized and classified as Level 3.
The changes in accumulated impairment losses of assets held for sale for the years ended December 31, 2016 and 2017, are as follows:
| 2016 | ||||||||||||||||||
| Beginning | Provision | Reversal | Others | Ending | ||||||||||||||
| (In millions of Korean won) | ||||||||||||||||||
| ￦ | (24,484 | ) | ￦ | (5,269 | ) | ￦ | 96 | ￦ | 409 | ￦ | (29,248 | ) | ||||||
| 2017 | ||||||||||||||||||
| Beginning | Provision1 | Reversal | Disposal and others1 | Ending | ||||||||||||||
| (In millions of Korean won) | ||||||||||||||||||
| ￦ | (29,248 | ) | ￦ | (24,192 | ) | ￦ | 5,138 | ￦ | 35,501 | ￦ | (12,801 | ) | ||||||
| 1 | Including the amount of assets of disposal group as held for sale sold during 2017 |
As of December 31, 2017, assets held for sale consist of Kookmin bank Myeongdong head office and ten properties that had been owned by closed branches of the bank. These were reclassified as assets held for sale by management’s decision and were not disposed of as at the reporting date. The sales of Myeongdong head office is scheduled to be completed in 2018 as sales contract was entered into during 2017. Negotiations with buyers are underway for three of the other ten properties. The Group is also actively seeking sales opportunities for the remaining seven properties.