Chapter 11: Non-current assets held for sale and discontinued operations (IFRS 5)

Example 1 - Held for sale (chapter 11). At 1 January 2015, Namibia carried a property in its statement of financial position at its revalued amount of $14 million in accordance with IAS 16 Property, Plant and Equipment. Depreciation is charged at $300,000 per year on the straight line basis. In April 2015, the management decided to sell the property and it was advertised for sale. By 30 April 2015, the sale was considered to be highly probable and the criteria for IFRS 5 Non-current Assets Held for Sale and Discontinued Operations were met at this date. At that date, the asset's fair value was $15.4 million. Costs to sell the asset were estimated at $300,000. On 31 January 2016, the property was sold for $15.6 million. No entries have been made in the financial statements regarding this property since 31 December 2014.

Example 6 - Investment property and change of use (chapter 8). Addlington owns a property that it is using as its head office. At 1 January 2015, its carrying value was $20 million and its remaining useful life was 20 years. On 1 July 2015 the business was reorganised and cheaper premises were found for use as a head office. It was therefore decided to lease the property under an operating lease. Addlington uses the fair value model for investment property. The property was valued by a qualified professional, who assessed its value as $21 million on 1 July 2015 and $21.6 million on 31 December 2015.

Example 4 - Specific borrowings (chapter 8). Columbia commenced the construction of an item of property, plant and equipment on 1 March 2015 and funded it with a $10 million loan. The rate of interest on the borrowings was 5%. Due to a strike no construction took place between 1 October and 1 November.

All three entities have a reporting date of 31 December 2015. Work in $000 ($1 million = 1,000).