ACCA FR · Guided practice (Show me how)
Chapter 8: Non-current assets held for sale and discontinued operations (IFRS 5)
Held for sale on classification, and re-presenting a discontinued operation
NCA-HFS. York bought an asset at a cost of $120,000 on 1 January 20X1 and depreciated it straight line over 10 years. The asset's residual value is nil and depreciation is charged pro-rata on a monthly basis. On 30 November 20X4, York classified the asset as a non-current asset held for sale in accordance with the rules of IFRS 5. At that date the fair value of the asset was $70,000 and the costs to sell were $2,000. The asset had not been sold by the 31 December 20X4 reporting date. Prepare extracts from the financial statements for the year ended 31 December 20X4.
Discontinued operations. Ruta Co's statement of profit or loss for the year ended 31 December 2017 ($000, 2017 / 2016):
During the year the entity ran down a material business operation with all activities ceasing on 30 March 2017. The results of the operation for 2017 and 2016 were ($000, 2017 / 2016):
The entity made gains of $7,000 on the disposal of non-current assets of the discontinued operation. These have been netted off against administrative expenses. Prepare the statement of profit or loss for the year ended 31 December 2017 complying with IFRS 5, disclosing the information on its face. Ignore taxation.
(a) York: measurement on classification
Calculate York's depreciation charge for 20X4, the asset's carrying amount at 30 November 20X4, and the impairment loss and held-for-sale measurement on classification.
(b) Ruta Co: separating the discontinued operation
Prepare Ruta Co's statement of profit or loss for the year ended 31 December 2017, showing the continuing and discontinued operations and the comparative figures for 2016.
Opening this exercise…