# PPE & CONSO

This topic contains 1 reply, has 2 voices, and was last updated by  MikeLittle 3 months ago. This post has been viewed 155 times

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• Ivy
Participant
• Topics: 7
• Replies: 7

bpp Dune (6/10)

In order to fund a new project, on 1 October 2009 the company decided to sell its leasehold property. From that date it commenced a short-term rental of an equivalent property. The leasehold property is being marketed by a property agent at a price of \$40 million, which was considered a reasonably achievable price at that date. The expected costs to sell have been agreed at \$500,000. Recent market transactions suggest that actual selling prices achieved for this type of property in the current market conditions are 15% less than the value at which they are marketed. At 31 March 2010 the property had not been sold.

How to calculate the “loss on reclassification” of leasehold property, the ans is \$4000 {37500-(40000*85%)-500}, but I really dont understand tis part.

bpp Pandar (12/09)

Why the finance cost has to plus back the 2000 and minus the 2000 again and why the non controlling post acq profit plus back the 2000*6/12

MikeLittle
Keymaster
• Topics: 1
• Replies: 8227

You don’t say in your post but I assume that the carrying value of the leased property is \$37,500

Now, what do you not understand? A realistic sale value is 15% lower than the advertised selling value – so \$40,000 * .85 = \$34,000,000

Selling costs are \$500,000

So net selling price is \$33,500,000

Gives rise to an impairment of \$37,500 – \$33,500 = \$4,000

Does that answer your full question or do I have to look up the question Pandar again?

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