- This topic has 3 replies, 3 voices, and was last updated 2 months ago by
.
- Posts
At 31 March 20X5, Rushworth had a property with a carrying amount in the financial statements of $20m and a remaining useful life of 40 years. On 30 September it was decided that the property should be sold and it was placed with a property agent. Selling costs were estimated at $1.5m. The property is being marketed at a price of $35m although the directors have been advised that they should accept offers around $33m. At 31 March 20X6, the property remained unsold although a number of buyers had expressed an interest.
At what amount should the property be reported in the statement of financial position at 31 March 20X6?
A. $19.75m
B. $20m
C. $31.5m
D. $33.5mit’s answer says its option C. But according to ifrs 5 , asset held for sale be recorded on lower of carrying amount and NrV. therefore lower in this case is carrying value i.e (20 – 0.25 depreciation)= 19.75. i don’t get it why would the answer be 31.5 m.
Yes, what you are saying is correct and I can only assume that the property is held under the revaluation model and they have failed to state this in the question.
If under the revaluation model then we revalue to fair value (33) immediately before reclassifying, and so the FV less costs to sell (33 – 1.5) will always be the lower and the amount that we transfer at.
Thanks.
Dear Sir,
On 30 September, the property is being marketed at a price of $35m while the FV-cost to sale of the asset (I assumed) is 33-1.5=31.5m.
Does this statement indicate that the property does not meet the critera of “highly probable sale” and should not transfer to “NCA held for sale” on On 30 September?
I look forward to your explanation.
Thank you Sir!
- You must be logged in to reply to this topic.